The following discussion and analysis of our financial condition and results of
operations should be read together with our financial statements and the related
notes and the other financial information included elsewhere in this Quarterly
Report. This discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those discussed below and elsewhere in this Quarterly Report,
particularly those under "Risk Factors."
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 under Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements include statements with respect to our beliefs,
plans, objectives, goals, expectations, anticipations, assumptions, estimates,
intentions and future performance, and involve known and unknown risks,
uncertainties and other factors, which may be beyond our control, and which may
cause our actual results, performance or achievements to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. All statements other than statements of historical
fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as "may," "can,"
"anticipate," "assume," "should," "indicate," "would," "believe," "contemplate,"
"expect," "seek," "estimate," "continue," "plan," "point to," "project,"
"predict," "could," "intend," "target," "potential" and other similar words and
expressions of the future.
Overview
Mycotopia Therapies, Inc. ("Mycotopia Therapy") focuses on the use of
psychedelics for the treatment of mental health issues. We intend to provide
psychedelic therapies through technology-focused, data-driven, and medical-based
solutions for people dealing with anxiety, depression, bipolar disorders, PTSD,
ADHD, autism, and addictions. With a primary focus of helping patients heal and
reclaim their life, Mycotopia Therapy endeavors to guide individuals through
their journey of healing. This is accomplished by acquiring an understanding of
the causes and works to mental wellness through psychedelic enhanced
psychotherapy, integrated with a professional team of mental wellness
practitioners and cutting-edge technology. Psychedelic therapy is a holistic and
spiritual approach providing healing and has shown successful treatment for many
years.
Recent Developments
Ehave, Inc, a publicly traded company, sold 100% of its wholly-owned subsidiary
Mycotopia Therapies, Inc., a Florida corporation, to the Company (previously
known as 20/20 Global Inc.) On May 4, 2021 20/20 Global, Inc. changed its name
to Mycotopia Therapies, Inc. and changed its OTC Markets' trading symbol to
TPIA. As a result of the transaction closing, Ehave controls approximately
75.77% of our outstanding shares
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires
companies to make estimates and assumptions that affect the reported amounts of
assets, liabilities and expenses and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
expenses during the reporting period. These estimates and judgments are subject
to an inherent degree of uncertainty, and actual results may differ. Our
significant accounting policies are more fully described in Note 3 to our
financial statements included elsewhere in this Quarterly Report. Critical
accounting estimates and judgments are continually evaluated and are based on
historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances, and are particularly
important to the portrayal of our financial position and results of operations.
Our estimates are primarily guided by observing the following critical
accounting policies.
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Results of Operations
Comparison of the Three Months Ended September 30, 2021 and 2020
General and administrative
General administrative expenses consist primarily of costs associated without
overall operations and being a public company. The costs include legal and
professional services, corporate and compliance related fees.
General and administrative expense for the three months ended September 30, 2021
totaled $2,354,600, an increase of $2,348,668 compared to $5,932 for the three
months ended September 30, 2020. The increase was primarily due to an increase
stock based compensation of $2,267,000 related to shares issued to consultants
and board members. In addition, an increase of $58,100 in legal and professional
fees in relation to being a public traded company, an increase of $26,267 in
compensation and consulting fees, an increase of $12,246 of stock transfer fees,
and an increase of $7,178 in other miscellaneous expenses.
Other expense
Other expense for the three months ended September 30, 2021 totaled $31,604, an
increase of $31,052 compared to $552 for the three months ended September 30,
2020. The increase was due to interest expense on our loan with Ehave, Inc.
Comparison of the Nine Months Ended September 30, 2021 and 2020
General and administrative
General administrative expenses consist primarily of costs associated without
overall operations and being a public company. The costs include legal and
professional services, corporate and compliance related fees.
General and administrative expense for the nine months ended September 30, 2021
totaled $2,467,198, an increase of $2,460,161 compared to $7,037 for the nine
months ended September 30, 2020. The increase was primarily due to an increase
stock based compensation of $2,267,000 related to shares issued to consultants
and board members. In addition, an increase of $58,100 in legal and professional
fees in relation to being a public traded company, an increase of $26,267 in
compensation and consulting fees, an increase of $12,246 of stock transfer fees,
and an increase of $14,880 in other miscellaneous expenses.
Other expense
Other expense for the nine months ended September 30, 2021 totaled $34,655, an
increase of $33,401 compared to $1,254 for the nine months ended September 30,
2020. The increase was due to interest expense on our loan with Ehave, Inc.
Liquidity and Capital Resources
To date, we have generated no revenues, experienced negative operating cash
flows and have incurred operating losses from our activities. We expect to
continue to fund our operations through the issuance of debt or equity. As of
September 30, 2021, our accumulated deficit was $2,531,027. Such conditions
raise substantial doubts about our ability to continue as a going concern.
As of September 30, 2021, we entered into term promissory notes with Ehave, Inc.
(a majority shareholder) in the amount of $625,000, in the aggregate. The notes
mature two years after the issuance date and bear an interest rate of 1.75% per
year. As of September 30, 2021, we owe $625,000 in accordance with these notes.
Further, during the quarter ended March 31, 2020, a pandemic occurred. While the
full impact of the pandemic continues to evolve, the financial markets have been
subject to significant volatility that adversely impacts our ability to enter
into, modify, and negotiate favorable terms and conditions relative to equity
and debt financing initiatives.
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The uncertain financial markets, potential disruptions in supply chains,
mobility restraints, and changing priorities could also affect our ability to
enter into key agreements. The outbreak and government measures taken in
response to the pandemic have also had a significant impact, both direct and
indirect, on businesses and commerce, as worker shortages have occurred; supply
chains have been disrupted; facilities and production have been suspended; and
demand for certain goods and services, such as medical services and supplies,
have spiked, while demand for other goods and services, such as travel, have
fallen. The future progression of the outbreak and its effects on our business
and operations are uncertain. While expected to be temporary, these disruptions
will negatively impact our sales, results of operations, financial condition,
and liquidity in 2021.
As of September 30, 2021, we had total current assets of $947,395 and total
current liabilities of $216,243 resulting in working capital of $731,152. Net
cash used in operating activities for the nine months ended September 30, 2021
was $145,357, which includes a net loss of $2,501,853, offset by changes in net
working capital items related to the increase in accrued interest on our
shareholder loan in the amount of $5,807 and an increase in accounts payable of
$58,474, in addition to stock based compensation of $2,267,000, depreciation of
$249, and amortization of $24,966.
As of September 30, 2021, we had cash of $947,395. We will need to raise
significant additional capital to continue to fund operations. We may seek to
sell common or preferred equity, convertible debt securities or seek other debt
financing. In addition, we may seek to raise cash through collaborative
agreements or from government grants. The sale of equity and convertible debt
securities may result in dilution to our shareholders and certain of those
securities may have rights senior to those of our common shares. If we raise
additional funds through the issuance of preferred stock, convertible debt
securities or other debt financing, these securities or other debt could contain
covenants that would restrict our operations. Any other third-party funding
arrangement could require us to relinquish valuable rights. The source, timing
and availability of any future financing will depend principally upon market
conditions, and, more specifically, on the progress of our product and programs
as well as commercial activities. Funding may not be available when needed, at
all, or on terms acceptable to us. Lack of necessary funds may require us, among
other things, to delay, scale back or eliminate expenses including those
associated with our planned product development and commercial efforts.
Operating Activities
During the first nine months of 2021 and 2020, the net cash outflow from
operating activities was $145,357 and $7,067, respectively. The 2021 amount was
comprised of our net loss of $2,501,853, offset by noncash stock-based
compensation expense of $2,267,000, depreciation of $249, amortization of the
debt discount of $24,966, and net increase in operating liabilities of $64,281.
The 2020 amount was comprised of our net loss of $8,291, offset by a net
increase in operating liabilities of $1,224.
Financing Activities
Financing activities totaling $985,000 for the nine months ended September 30,
2021 reflected $485,000 in proceeds from the sale convertible debt and proceeds
of $500,000 from loans from shareholders. Financing activities for the nine
months ended September 30, 2020 consisted of $125,000 in proceeds from loans
from shareholders.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under SEC rules, such as
relationships with unconsolidated entities or financial partnerships, which are
often referred to as structured finance or special purpose entities, established
for the purpose of facilitating financing transactions that are not required to
be reflected on our balance sheets.
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MYCOTOPIA THERAPIES, INC. 