Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 28, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Entity Registrant Name | 1606 Corp. | ||
Entity Central Index Key | 0001877461 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Entity Ex Transition Period | false | ||
Entity Common Stock Shares Outstanding | 37,103,394 | ||
Entity Public Float | $ 18,551,697 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 000-53425 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 86-1497346 | ||
Entity Address Address Line 1 | 2425 E. Camelback Rd Suite 150 | ||
Entity Address City Or Town | Phoenix | ||
Entity Address State Or Province | AZ | ||
Entity Address Postal Zip Code | 85016 | ||
City Area Code | 602 | ||
Local Phone Number | 481-1544 | ||
Security 12g Title | Common Stock, Par value $0.0001 | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Turner, Stone & Company, L.L.P. | ||
Auditor Location | Dallas, Texas | ||
Auditor Firm Id | 76 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash | $ 9,543 | $ 0 |
Accounts receivable | 0 | 82 |
Inventory | 31,449 | 50,265 |
Total Assets | 40,992 | 50,347 |
Current Liabilities: | ||
Note Payable to related party | 195,050 | 0 |
Current portion of long-term Note Payable to related party | 27,034 | 0 |
Total current liabilities | 222,084 | 0 |
Note Payable to related party - long-term, net of current portion | 36,422 | 0 |
Total liabilities | 258,506 | 0 |
Commitments and Contingencies (Note 6) | ||
Parent's Net Investment | 0 | 50,347 |
Undesignated preferred stock, par value $0.0001; 40,000,000 authorized as of December 31, 2021; no shares issued and outstanding as of December 31, 2021, and 2020, respectively | 0 | 0 |
Common stock, par value $0.0001 per share, 5,000,000,000 shares authorized, 37,103,394 shares and no shares issued and outstanding as of December 31, 2021, and 2020, respectively | 3,710 | 0 |
Additional paid-in capital | 74,374 | |
Accumulated deficit | (301,261) | 0 |
Total stockholders' (deficit) and parent's net investment | (217,514) | 50,347 |
Total liabilities and stockholders' equity (deficit) | 40,992 | 50,347 |
Class A Convertible Preferred Stock [Member] | ||
Commitments and Contingencies (Note 6) | ||
Undesignated preferred stock, par value $0.0001; 40,000,000 authorized as of December 31, 2021; no shares issued and outstanding as of December 31, 2021, and 2020, respectively | $ 5,663 | $ 0 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 5,000,000,000 | 5,000,000,000 |
Common stock, shares issued | 37,103,394 | 0 |
Common stock, shares outstanding | 37,103,394 | 0 |
Preferred stock, par value | $ 0.0001 | |
Preferred stock, shares authorized | 100,000,000 | |
Class A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 60,000,000 | 60,000,000 |
Preferred stock, shares issued | 56,635,000 | 0 |
Preferred stock, shares outstanding | 56,635,000 | 0 |
Undesignated Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 40,000,000 | 40,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
STATEMENTS OF OPERATIONS | ||
Revenues, net of discounts | $ 34,069 | $ 67,907 |
Cost of goods sold | (21,696) | (51,834) |
Gross profit | 12,373 | 16,073 |
Operating expenses: | ||
Selling, general and administrative | 313,634 | 243,815 |
Total operating expenses | 313,634 | 243,815 |
Loss before Income tax | (301,261) | (227,742) |
Income tax expense | 0 | 0 |
Net loss | $ (301,261) | $ (227,742) |
Net loss per share - basic and diluted | $ (0.01) | $ 0 |
Weighted average shares outstanding - basic and diluted | 37,098,910 | 37,089,102 |
STATEMENTS OF STOCKHOLDERS EQUI
STATEMENTS OF STOCKHOLDERS EQUITY AND PARENTS NET INVESTMENT - USD ($) | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | Net Parent Investment | Accumulated Deficit |
Balance, amount at Dec. 31, 2019 | $ 94,800 | $ 0 | $ 0 | $ 0 | $ 94,800 | $ 0 |
Net loss | (227,742) | 0 | 0 | 0 | (227,742) | 0 |
Issuance of Parent's common stock for stock-based compensation | 88,000 | 88,000 | ||||
Transfers from parent | 95,289 | 0 | 0 | 0 | 95,289 | 0 |
Balance, amount at Dec. 31, 2020 | 50,347 | 0 | 0 | 0 | 50,347 | 0 |
Net loss | (315,962) | 0 | 0 | 0 | (14,701) | (301,261) |
Transfers from parent | 5,648 | 5,648 | ||||
Issuance of note to former parent, SinglePoint Inc. | (41,294) | $ 0 | $ 0 | 0 | (41,294) | 0 |
Preferred stock distributed in connection with spinoff, April 7, 2021, shares | 59,000,000 | |||||
Preferred stock distributed in connection with spinoff, April 7, 2021, amount | 0 | $ 5,900 | (5,900) | 0 | 0 | |
Preferred stock cancelled, shares | (2,365,000) | |||||
Preferred stock cancelled, amount | 0 | $ (237) | 237 | |||
Common stock distributed in connection with spinoff, April 7, 2021, shares | 36,953,394 | |||||
Common stock distributed in connection with spinoff, April 7, 2021, amount | 0 | $ 3,695 | (3,695) | |||
Common stock issued for cash, shares | 150,000 | |||||
Common stock issued for cash, amount | 75,000 | $ 15 | 74,985 | |||
Other | 8,747 | 8,747 | ||||
Balance, shares at Dec. 31, 2021 | 56,635,000 | 37,103,394 | ||||
Balance, amount at Dec. 31, 2021 | $ (217,514) | $ 5,663 | $ 3,710 | $ 74,374 | $ 0 | $ (301,261) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (301,261) | $ (227,742) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Issuance of SinglePoint Inc.'s stock for stock-based compensation | 0 | 88,000 |
Acquisition expense from related party | 22,161 | 0 |
Other | (305) | 0 |
Change in assets and liabilities: | ||
Accounts receivable | 82 | 32,918 |
Inventory | 18,816 | 11,535 |
Net Cash Used in Operating Activities | (260,507) | (95,289) |
Cash flows from investing activities: | ||
Net cash provided by investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Advance from parent | 0 | 95,289 |
Note payable to shareholder | 195,050 | 0 |
Proceeds from sale of common stock | 75,000 | 0 |
Net cash provided by financing activities | 270,050 | 95,289 |
Net Change in Cash | 9,543 | 0 |
Cash, beginning of the period | 0 | 0 |
Cash, end of the period | 9,543 | 0 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 0 | 0 |
Income taxes paid | $ 0 | $ 0 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2021 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Corporate History 1606 Corp. (“1606” or the “Company”) was formed in February 2021 and was a division of SinglePoint Inc. (“SinglePoint”) until April 2021, when SinglePoint spun off 1606 whereby each holder of common stock and Class A Preferred Stock of SinglePoint received one share of unregistered and restricted common stock and Class A Preferred Stock of the Company for each such shared owned of SinglePoint. Business 1606 is an early-stage sales marketing company focused on the domestic hemp cigarette (aka pre-roll) market. The Company currently sells hemp products through individual online sales and used to distribute hemp products to distributors, convenience stores, and smoke shops in multiple states. For the year ended December 31, 2021, revenues of $32,504 and $0, were derived from online sales and distributors, respectively. For the year ended December 31, 2020, revenues of $62,934 and $4,973, were derived from online sales and distributors, respectively. The Company’s 1606 Original brand launched in December 2019, with its pre-roll cigarette sales beginning in January 2021. Going Concern The financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2021, the Company has yet to achieve significant profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue in existence is dependent on the Company’s ability to develop the Company’s business and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional equity financing through private placements of the Company’s common stock. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – Basis of Presentation The Company is being presented as a carve out of SinglePoint which includes 1606 Corp. and certain other accounts of SinglePoint and collectively presents the Company on a standalone basis. Management believes the assumptions underlying the Company’s standalone financial statements are reasonable. Nevertheless, the financial statements may not include all of the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas. Basis of Presentation (continued) SinglePoint used a centralized approach to cash management and financing its operations, including the operations of the Company. Accordingly, none of the cash and cash equivalents of SinglePoint have been allocated to the Company in the financial statements. Transactions between SinglePoint and the Company are accounted for through Parent’s Net Investment. The expenses of the Company for the year ended December 31, 2021 (until April 2021, when SinglePoint spun off 1606), and for the year ended December 31, 2020, have been allocated by management between the Company and Singlepoint based either on specific attribution of those expenses or, where necessary and appropriate, based on management’s best estimate of an appropriate proportional allocation. Use of Estimates The preparation of the financial statements in conformity with U.S. 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 amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less. Accounts Receivable and Credit Policy Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Management of the Company considers all receivables collectable. Uncollectable accounts are charged to expense when the account is determined to be uncollectable. The allowance is provided based upon a review of the individual accounts outstanding, prior history of uncollectable accounts receivable and existing economic conditions. At December 31, 2021, and 2020, the allowance for doubtful accounts balance is $0 and $0, respectively. Inventory Inventories are valued at the lower of cost (first in, first out basis) or market, and consist primarily of hemp products. The Company’s inventory as of December 31, 2021, and 2020 consisted of finished hemp products. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence, or shelf-life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. Revenue Recognition The Company derives its revenues primarily from the sale of hemp products. The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required. Revenue Recognition (Continued) Revenues are recognized when control of these products is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Any shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year. Cost of Goods Sold and Selling, General and Administrative Expenses Costs associated with the production and procurement of product are included in cost of goods sold, including shipping and handling costs such as inbound freight costs, purchasing and receiving costs, inspection costs and other product procurement related charges. All other expenses are included in selling, general and administrative expenses, as the predominant expenses associated therewith are general and administrative in nature. Parent’s Net Investment The Company’s equity on the Balance Sheets (until April 2021, when SinglePoint spun off 1606) represents Singlepoint’s net investment in the Company’s business and is presented as “Parent’s Net Investment”. SinglePoint performed cash management and other treasury-related functions on a centralized basis for all of its divisions, which included the Company. Liabilities recorded by SinglePoint, whose related expenses have been pushed down to the Company, are included in Parent’s Net Investment. All transactions reflected in the Parent’s Net Investment in the accompanying Balance Sheets have been considered cash receipts and payments for purposes of the Statements of Cash Flows and are reflected in the financing activities in the accompanying Statements of Cash Flows. Income taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates. Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by a tax authority and based upon the technical merits of the tax position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. An unrecognized tax benefit, or a portion thereof, is presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. Net Loss Per Common Share a. Basic loss per share data is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during the period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and other common stock equivalents, computed using the treasury stock method, and are excluded from the calculation of weighted average dilutive common shares, to the extent they are issued and outstanding, because their effect would be anti-dilutive. The number of potentially dilutive shares excluded from the calculation of diluted earnings per share were 2,265,400 related to the Company’s Class A Preferred Stock. These shares were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive. b. At December 31, 2021, 37,103,394 shares of the Company’s Common Stock were outstanding. This share amount is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off as no common stock was outstanding prior to the date of the Spin-Off. For the year ended December 31, 2021, calculation, these shares are treated as issued and outstanding from January 1, 2020, for purposes of calculating historical basic and diluted earnings per share. The financial statements for 2020 were adjusted herein to reflect the subsequent consummation of the spinout and the inclusion of basic and diluted earnings per share, as described above, consistent with that of the year ended December 31, 2021. Basic loss per share data for each period presented is computed using the weighted-average number of shares of common stock outstanding during each such period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of: (a) shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method; and (b) shares of non-vested restricted stock. There are no shares that are excluded from the calculation of weighted average dilutive common shares. Selling and Marketing Selling and Marketing costs are expensed as incurred. Such costs were $132,902 and $86,608 for the year ended December 31, 2021, and 2020, respectively, and are reported under selling, general and marketing in the accompanying statements of operations. Fair value measurements Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below: Level 1 Level 2 Level 3 The Company considers the carrying amounts of its financial instruments (cash and accounts receivable) in the balance sheet to approximate fair value because of the short-term or highly liquid nature of these financial instruments. Segment reporting The Company operates in one business segment. As a result, the Company’s operations are a single reportable segment, which is consistent with the Company’s internal management reporting. Subsequent Events The Company has evaluated all subsequent events from December 31, 2021, through the date of filing of this report. See note 7 for disclosure of subsequent events. Recent Accounting Pronouncements On December 22, 2017, the U.S. government enacted significant changes to federal tax law following the passage of the Tax Cuts and Jobs Act (“the Act”). Following the enactment of the Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”). The Company follows the guidance in SAB 118, which provides additional clarification regarding the application of US GAAP in situations where the Company does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act for the reporting period in which the Act was enacted. SAB 118 provides for a measurement period beginning in the reporting period that includes the Act’s enactment date and ending when the Company has obtained, prepared, and analyzed the information needed in order to complete the accounting requirements but in no circumstances should the measurement period extend beyond one year from the enactment date. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 3 – RELATED PARTY TRANSACTIONS Related Party Transactions During the year ended December 31, 2021, the Company borrowed $195,050, in a series of payments, from the Company’s Chief Executive Officer (“CEO”) in exchange for the issuance of a promissory note. The note does not bear interest and is due in a lump sum payment on May 30, 2022 In June 2021, the Company entered into an Asset Purchase Agreement with SinglePoint to purchase certain assets in exchange for the issuance of a promissory note (the “Note”) for $63,456 with SinglePoint. The Note bears interest at 5%, has a three-year term, and is due in monthly installments of $1,902 beginning August 1, 2021. The Company has not made any payments on the Note. On April 28, 2021, the Company sold a total of 150,000 shares of common stock to three individuals who are children of the Company’s CEO and Sole Director. Each individual paid $25,000 and was issued 50,000 shares of common stock Parent’s Net Investment at December 31, 2021, and 2020, was $0 and $50,347, respectively, and relates to Singlepoint’s investment in the Company. Note Payable, related party In June 2021, the Company entered into an Asset Purchase Agreement with Singlepoint Inc. to purchase certain assets in exchange for the issuance of a promissory note (the “Note”) for $63,456 with Singlepoint. The Note bears interest at 5%, has a three-year term, and is due in monthly installments of $1,902 beginning August 1, 2021. The Company has not made any payments on the Note. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2021 | |
CAPITAL STOCK | |
CAPITAL STOCK | NOTE 4 – CAPITAL STOCK Capital Stock The Company’s authorized capital stock consists of 5,000,000,000 shares of common stock, $0.0001 par value per share and 100,000,000 shares of Preferred Stock, $0.0001 par value per share. 60,000,000 shares of Preferred Stock have been designated as Class A Convertible Preferred Stock (the “Class A Preferred Stock”). Common Stock The holders of common stock are entitled to one vote for each share held. The affirmative vote of a majority of votes cast at a meeting which commences with a lawful quorum is sufficient for approval of most matters upon which shareholders may or must vote, including the questions presented for approval or ratification at the Annual Meeting. However, an amendment of the articles of incorporation requires the affirmative vote of a majority of the total voting power for approval. Common shares do not carry cumulative voting rights, and holders of more than 50% of the common stock have the power to elect all directors and, as a practical matter, to control the Company. Holders of common stock are not entitled to preemptive rights, and the common stock may only be redeemed at our election. Preferred Stock As of December 31, 2021, the Company had 100,000,000 authorized shares of preferred stock, par value $0.0001 per share, of which 60,000,000 were designated Class A Preferred Stock. The Company has 56,635,000 shares of Class A Preferred Stock outstanding, of which 31,230,000 shares of Class A Preferred Stock are held by the Company’s CEO. The former officers and directors of Singlepoint hold the remaining shares of the Class A Preferred Stock. The Class A Preferred Stock has the following material rights and preferences (as is more fully set forth in Certificate of Designation of the Class A Preferred Stock). Ranking The Class A Preferred Stock ranks, as to dividends and upon liquidation, senior and prior to the Common Stock of the Company. Liquidation In the event of liquidation, dissolution or winding up of the Company, the holders of the Class A Preferred Stock are entitled, out of the assets of the Company legally available for distribution, to receive, before any payment to the holders of shares of Common Stock or any other class or series of stock ranking junior, and amount per share equal to $1.00. Voting Each share of Class A Preferred Stock entitles the holder thereof to 50 votes on any matters requiring a shareholder vote of the Company. Conversion Each share of our Class A Preferred Stock is convertible into common stock on a one-for-25 basis at the option of the holder. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
INCOME TAXES | NOTE 5 – INCOME TAXES The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward The components of income tax expense for the years ended December 31, 2021, and 2020, consist of the following: 2021 2020 Federal tax statutory rate 21.0 % 21.0 % Permanent differences (0.0 )% (0.0 )% Valuation allowance (21.0 )% (21.0 )% Effective rate 0 % 0 % Significant components of the Company’s estimated deferred tax assets and liabilities as of December 31, 2021, and 2020 are as follows: 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 152,265 $ 89,000 Total deferred tax asset 152,265 89,000 Valuation allowance (152,265 ) (89,000 ) $ 0 $ 0 The deferred tax assets associated with the net operating losses included in the table above reflect proforma net operating losses as if the Company were a separate taxpayer during the periods presented (until April 2021, when SinglePoint spun off 1606). |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 – COMMITMENTS AND CONTINGENCIES Legal Proceedings and Other Claims From time to time, we are a party to claims and actions for matters arising out of our business operations. We regularly evaluate the status of the legal proceedings and other claims in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although the outcome of claims and litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a claim or legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings, and advice of outside legal counsel are expensed as incurred Employment Agreement In May 2021 the Company entered into an employment agreement with Mr. Lambrecht. The agreement provided that Mr. Lambrecht would serve as Chief Executive Officer Company for a term of three years at an annual salary of Two Hundred Fifty Thousand Dollars ($250,000), and an incentive bonus as determined by the board of directors. The agreement shall automatically be renewed for additional six month periods unless either party has provided written termination of this Agreement at least 90 days prior to the expiration of such term. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | None. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The Company is being presented as a carve out of SinglePoint which includes 1606 Corp. and certain other accounts of SinglePoint and collectively presents the Company on a standalone basis. Management believes the assumptions underlying the Company’s standalone financial statements are reasonable. Nevertheless, the financial statements may not include all of the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented, and may not reflect the Company’s results of operations, financial position and cash flows had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred if the Company had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas. SinglePoint used a centralized approach to cash management and financing its operations, including the operations of the Company. Accordingly, none of the cash and cash equivalents of SinglePoint have been allocated to the Company in the financial statements. Transactions between SinglePoint and the Company are accounted for through Parent’s Net Investment. The expenses of the Company for the year ended December 31, 2021 (until April 2021, when SinglePoint spun off 1606), and for the year ended December 31, 2020, have been allocated by management between the Company and Singlepoint based either on specific attribution of those expenses or, where necessary and appropriate, based on management’s best estimate of an appropriate proportional allocation. |
Use of Estimates | The preparation of the financial statements in conformity with U.S. 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 amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates. |
Cash and Cash Equivalents | Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less. |
Accounts Receivable and Credit Policy | Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Management of the Company considers all receivables collectable. Uncollectable accounts are charged to expense when the account is determined to be uncollectable. The allowance is provided based upon a review of the individual accounts outstanding, prior history of uncollectable accounts receivable and existing economic conditions. At December 31, 2021, and 2020, the allowance for doubtful accounts balance is $0 and $0, respectively. |
Inventory | Inventories are valued at the lower of cost (first in, first out basis) or market, and consist primarily of hemp products. The Company’s inventory as of December 31, 2021, and 2020 consisted of finished hemp products. At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence, or shelf-life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. |
Revenue Recognition | The Company derives its revenues primarily from the sale of hemp products. The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required. Revenues are recognized when control of these products is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Any shipping and handling fees charged to customers are reported within revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year. |
Cost of Goods Sold and Selling, General and Administrative Expenses | Costs associated with the production and procurement of product are included in cost of goods sold, including shipping and handling costs such as inbound freight costs, purchasing and receiving costs, inspection costs and other product procurement related charges. All other expenses are included in selling, general and administrative expenses, as the predominant expenses associated therewith are general and administrative in nature. |
Parent's Net Investment | The Company’s equity on the Balance Sheets (until April 2021, when SinglePoint spun off 1606) represents Singlepoint’s net investment in the Company’s business and is presented as “Parent’s Net Investment”. SinglePoint performed cash management and other treasury-related functions on a centralized basis for all of its divisions, which included the Company. Liabilities recorded by SinglePoint, whose related expenses have been pushed down to the Company, are included in Parent’s Net Investment. All transactions reflected in the Parent’s Net Investment in the accompanying Balance Sheets have been considered cash receipts and payments for purposes of the Statements of Cash Flows and are reflected in the financing activities in the accompanying Statements of Cash Flows. |
Income Taxes | Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates. Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by a tax authority and based upon the technical merits of the tax position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. An unrecognized tax benefit, or a portion thereof, is presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. |
Net Loss Per Common Share | a. Basic loss per share data is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during the period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and other common stock equivalents, computed using the treasury stock method, and are excluded from the calculation of weighted average dilutive common shares, to the extent they are issued and outstanding, because their effect would be anti-dilutive. The number of potentially dilutive shares excluded from the calculation of diluted earnings per share were 2,265,400 related to the Company’s Class A Preferred Stock. These shares were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive. b. At December 31, 2021, 37,103,394 shares of the Company’s Common Stock were outstanding. This share amount is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off as no common stock was outstanding prior to the date of the Spin-Off. For the year ended December 31, 2021, calculation, these shares are treated as issued and outstanding from January 1, 2020, for purposes of calculating historical basic and diluted earnings per share. The financial statements for 2020 were adjusted herein to reflect the subsequent consummation of the spinout and the inclusion of basic and diluted earnings per share, as described above, consistent with that of the year ended December 31, 2021. Basic loss per share data for each period presented is computed using the weighted-average number of shares of common stock outstanding during each such period. Diluted loss per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of: (a) shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method; and (b) shares of non-vested restricted stock. There are no shares that are excluded from the calculation of weighted average dilutive common shares. |
Selling and Marketing | Selling and Marketing costs are expensed as incurred. Such costs were $132,902 and $86,608 for the year ended December 31, 2021, and 2020, respectively, and are reported under selling, general and marketing in the accompanying statements of operations. |
Fair Value measurements | Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below: Level 1 Level 2 Level 3 The Company considers the carrying amounts of its financial instruments (cash and accounts receivable) in the balance sheet to approximate fair value because of the short-term or highly liquid nature of these financial instruments. |
Segment reporting | The Company operates in one business segment. As a result, the Company’s operations are a single reportable segment, which is consistent with the Company’s internal management reporting. |
Subsequent Events | The Company has evaluated all subsequent events from December 31, 2021, through the date of filing of this report. See note 7 for disclosure of subsequent events. |
Recent Accounting Pronouncements | On December 22, 2017, the U.S. government enacted significant changes to federal tax law following the passage of the Tax Cuts and Jobs Act (“the Act”). Following the enactment of the Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”). The Company follows the guidance in SAB 118, which provides additional clarification regarding the application of US GAAP in situations where the Company does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act for the reporting period in which the Act was enacted. SAB 118 provides for a measurement period beginning in the reporting period that includes the Act’s enactment date and ending when the Company has obtained, prepared, and analyzed the information needed in order to complete the accounting requirements but in no circumstances should the measurement period extend beyond one year from the enactment date. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Components of Income Tax Expense | 2021 2020 Federal tax statutory rate 21.0 % 21.0 % Permanent differences (0.0 )% (0.0 )% Valuation allowance (21.0 )% (21.0 )% Effective rate 0 % 0 % |
Deferred Tax Assets and Liabilities | 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 152,265 $ 89,000 Total deferred tax asset 152,265 89,000 Valuation allowance (152,265 ) (89,000 ) $ 0 $ 0 |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue | $ 34,069 | $ 67,907 |
Distribution Revenue [Member] | ||
Revenue | 0 | 4,973 |
Sales Revenue [Member] | ||
Revenue | $ 32,504 | $ 62,934 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2021USD ($)integershares | Dec. 31, 2020USD ($)shares | |
Allowance for doubtful accounts balance | $ | $ 0 | $ 0 |
Selling and Marketing costs | $ | $ 132,902 | $ 86,608 |
Number of operating segment | integer | 1 | |
Common stock, shares outstanding | shares | 37,103,394 | 0 |
Class A Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | shares | 2,265,400 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Apr. 28, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Parent's Net Investment | $ 0 | $ 50,347 | ||
Note Payable to related party | 195,050 | $ 0 | ||
Asset Purchase Agreement [Member] | ||||
Note Payable to related party | $ 63,456 | |||
Related Party Transaction, Rate | 5.00% | |||
Related Party Transaction, Amounts of Transaction | $ 1,902 | |||
Related Party Transaction, Terms and Manner of Settlement | three-year | |||
Note Payable [Member] | Asset Purchase Agreement [Member] | ||||
Note Payable to related party | $ 63,456 | |||
Related Party Transaction, Rate | 5.00% | |||
Related Party Transaction, Amounts of Transaction | $ 1,902 | |||
Related Party Transaction, Terms and Manner of Settlement | three-year | |||
Chief Executive Officer [Member] | ||||
Note Payable to related party | $ 195,050 | |||
Related Party Transaction, Due Date | May 30, 2022 | |||
CEO and Sole Director [Member] | ||||
Number of shares of common stock | 150,000 | |||
Individual Paid, Amount | $ 25,000 | |||
Common shares issued | 50,000 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Preferred stock, par value | $ 0.0001 | |
Preferred stock, shares authorized | 100,000,000 | |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Voting Rights | The holders of common stock are entitled to one vote for each share held. | |
Common stock, shares authorized | 5,000,000,000 | 5,000,000,000 |
Preferred Stock, Voting Rights | Each share of Class A Preferred Stock entitles the holder thereof to 50 votes on any matters requiring a shareholder vote of the Company. | |
Preferred Stock, Conversion Basis | Each share of our Class A Preferred Stock is convertible into common stock on a one-for-25 basis at the option of the holder. | |
Liquidation, amount per share | $ 1 | |
Class A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 60,000,000 | 60,000,000 |
Number of preferred stock shares held by CEO | 31,230,000 | |
Preferred stock, shares outstanding | 56,635,000 | 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
Federal tax statutory rate | 21.00% | 21.00% |
Permanent differences | (0.00%) | (0.00%) |
Valuation allowance | (21.00%) | (21.00%) |
Effective rate | 0.00% | 0.00% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 152,265 | $ 89,000 |
Total deferred tax asset | 152,265 | 89,000 |
Valuation allowance | (152,265) | (89,000) |
Deferred Tax Assets, Net of Valuation Allowance | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended |
May 31, 2021USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Term of agreement | 90 days |
Annual salary | $ 250,000 |