ITEM 1. BUSINESS
Corporate Background and History
We were incorporated in Nevada on January 21, 2000, under the name RM Investors, Inc. In March 2014, under the terms of an Exchange Agreement and Plan of Reorganization, we acquired 100% of the issued and outstanding shares of our subsidiary 20/20 Produce Sales, Inc., an Idaho corporation that was incorporated on December 22, 1994. On March 26, 2014, we amended and restated our articles of incorporation to increase our authorized shares of common stock to 100,000,000 shares, par value $0.001, and to authorize 5,000,000 shares of preferred stock, par value $0.001. In connection with this reorganization, we obtained a new CUSIP number for our common stock, FINRA approval of our name change from RM Investors, Inc. to 20/20 Global, Inc., and a new trading symbol for our shares on the OTC market place and effected a 2-for-1 forward split of the then issued and outstanding shares of our common stock. Our trading symbol is TWGL. We have one subsidiary, 20/20 Produce, Inc. Our board of directors consists of Ben Kaplan and Mark Croskey.
In December 2020, we entered into definitive agreements with Ehave, Inc., an Ontario corporation, Mycotopia Therapies Inc., a Florida corporation and wholly owned subsidiary of Ehave, Inc., and the former and current directors of 20/20 Global that provide for the 20/20 Global’s purchase of all of the outstanding stock of Mycotopia Therapies, Inc. from Ehave, Inc.
Since the reverse merger in January 20, 2021 (the “Closing”), the Company has been leveraging its relationship with its parent company, Ehave, Inc. (“EHVVF”) to integrate the use of digital and data therapeutics to measure the effect of Psylicibin and related compounds on mental health. The Company has been negotiating with third parties to integrate EHVVF’s EEG brain cap technology to capture neurological data during the use of mental health therapies involving the use of Psylicibin and related compounds. The Company believes that the mental health benefits bestowed by these compounds are numerous, particularly to combat depression and addiction, and is aligning itself with the evolving legal and policy landscape of mental health regulation.
The Company seeks to take advantage of the interest in the use of compounds found in naturally occurring psychoactive compounds for the treatment of mental health issues. In addition to the research on the effects of these compounds on mental well-being, the Company has engaged with other companies seeking to synthesize such compounds in a pharmaceutical environment to jointly develop therapies.
Since closing the Company has entered into two letters-of-intent for joint ventures to further its goals of providing alternative therapies for mental health and well-being.
References to “us,” “we,” “our,” and correlative terms refer to 20/20 Global, Inc. and our wholly owned subsidiary, 20/20 Produce Sales, Inc., an Idaho corporation, through which we conducted our activities.
Overview
Prior to the January 2021 Closing with Ehave, we were a distributor of fresh produce with a tradition of service for the past 20 years. We offered a full line of count cartons and all size packs on russet potatoes and year-round onions from Idaho, Colorado, Nebraska, and Washington and apples were available year-round from Washington and seasonally from Idaho, Minnesota, and New York. We had packing facilities, with an efficient and reliable supply chain. All of our outside sales associates had production and agricultural backgrounds with exceptional product and market knowledge. We were shipping fresh produce via refrigerated semi-trucks from manufacturing facilities to wholesalers from 10 separate geographical locations in Idaho, Washington, California, New Mexico, and Texas, consistently providing cost-efficient, on-time transportation solutions from all of our shipping locations.
Based on the loss of business generated through our agreement with Markon Cooperative, Inc., as detailed below, we decided to discontinue our fresh produce distribution business.
Material Contracts
Completion of Acquisition of Disposition of Assets
In December 2020, we entered into definitive agreements with Ehave, Inc., an Ontario corporation (“Ehave”), Mycotopia Therapies Inc., a Florida corporation and wholly owned subsidiary of Ehave (“MYC”), and the former and current directors of 20/20 Global that provide for: (i) 20/20 Global’s purchase for $350,000 in cash of all of the outstanding stock of MYC from Ehave under a Stock Purchase Agreement, resulting in MYC becoming a wholly owned subsidiary of 20/20 Global; and (ii) the change of control of 20/20 Global’s board of directors and management under a Change of Control and Funding Agreement. In a related transaction, Ehave agreed to purchase 9,793,754 shares of 20/20 Global common stock, which constitute approximately 75.77% of the issued and outstanding shares of 20/20 Global’s common stock, for $350,000 in cash through a Stock Purchase Agreement (“MYC SPA”) with 20/20 Global stockholders Mark D. Williams, Colin Gibson, and The Robert and Joanna Williams Trust. Prior to these transactions, neither 20/20 Global nor its officers and directors had a material relationship with Ehave, MYC, or their respective officers and directors.
A closing of the transactions contemplated by the above documents initially scheduled for January 4, 2021, was delayed by agreement. All of the above transactions were closed on January 19, 2021.
As a result of the MYC SPA, MYC became a wholly owned subsidiary of 20/20 Global, through which we plan to conduct our operations. MYC is a development-stage enterprise that proposes to develop a business to provide psychedelic-enhanced holistic methodologies to improve mental wellbeing. In the next five years, our business model will focus on the following areas: palliative care, depression, and anxiety. We will leverage our minority equity interest in PsychedeliTech Inc. to create new opportunities for our shareholders and partners. We hope to license and acquire access to technology and companies that will build added value for our company as this industry matures.
Regulation
We were subject to typical federal, state, and local regulations and laws governing the operations of production and processing concerns, including environmental disposal, storage, and discharge regulations and laws; employee safety laws and regulations; and labor practices laws and regulations. We are licensed through the U.S. Department of Agriculture under the Perishable Agriculture Commodities Act (PACA). Our PACA certificate is renewed annually. Other than our PACA certificate, we are not required under current laws and regulations to obtain or maintain any specialized or agency-specific licenses, permits, or authorizations to conduct our production and processing services. We believe we are in substantial compliance with all relevant regulations applicable to our business and operations.
Employees
We currently have one employee, who is also our chief executive officer.
ITEM 1A.
ITEM 1A. RISK FACTORS
In addition to the negative implications of all information and financial data included in or referred to directly in this report, you should consider the following risk factors. This report contains forward-looking statements and information concerning us, our plans, and future events. Those statements should be read together with the discussion of risk factors set forth below, because those risk factors could cause actual results to differ materially from such forward-looking statements.
The auditors’ report for the years ended December 31, 2020 and 2019, contains an explanatory paragraph about our ability to continue as a going concern.
The report of our auditors on our consolidated financial statements for the years ended December 31, 2020 and 2019, contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. We had a net loss of $157,235 and $253,222 from continuing operations for the years ended December 31, 2020 and 2019, respectively, and we have discontinued our operations, which raises substantial doubt about our ability to continue as a going concern. Our ability to continue our operations as a going concern is dependent on management’s plans, which includes successfully integrating Mycotopia Therapies, Inc. which was acquired subsequent to December 31, 2020. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Management believes that actions presently being taken will provide the opportunity for us to continue as a going concern.
We have no current business activities that will generate revenues in the near future.
We have no revenue and cannot predict when we will begin to generate revenue. We have recently changed our business plan to that of Mycotopia Therapies Inc., our wholly owned subsidiary acquired in January 2021. .
We may not be able to establish new operations that generate revenue.
Following the Closing, we have changed our business plan. The Company seeks to take advantage of the interest in the use of compounds found in naturally occurring psychoactive compounds for the treatment of mental health issues. As this is a new business there can be no assurance that we will be able to generate revenue in the near term.
Our acquisition strategy may not be successful.
Our growth strategy may be based in part on growth through an acquisition of companies already in the business of investigating the use of Psylocibin and related compounds for the treatment of mental health issues, which poses a number of risks. We may not be successful in identifying appropriate acquisition candidates, consummating an acquisition on satisfactory terms, or adding any newly acquired or expanded business. We may issue additional shares of our common stock, incur long-term or short-term indebtedness, spend cash, or use a combination of these for all or part of the consideration paid in future acquisitions. The execution of our acquisition strategy could entail repositioning or similar actions that in turn require us to record impairments and other charges. Any such charges would reduce our earnings.
Our success depends on the services of our senior executives, the loss of whom could disrupt our operations.
Our ability to maintain our competitive position is dependent to a large degree on the services of our senior management team. We may not be able to retain our existing senior management personnel or attract additional qualified senior management personnel.
We are controlled by our principal shareholders.
Our officers and directors are our principal shareholders. As of December 31, 2020, together they directly own 87.37% of our outstanding shares of common stock. We expect our principal shareholders to continue to use their interest in our common stock: to significantly influence the direction of our management, the election of our entire board of directors, and the method and timing of the payment of dividends; to determine substantially all other matters requiring
shareholder approval; and to control us. The concentration of our beneficial ownership may have the effect of delaying, deterring, or preventing a change in control, may discourage bids for our common stock at a premium over their market price, and may otherwise adversely affect the market price of our common stock.
Penny stock regulations will impose certain restrictions on resales of our securities, which may cause an investor to lose some or all of its investment.
The U.S. Securities and Exchange Commission has adopted regulations that generally define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share that is not traded on a national securities exchange or that has an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker-dealers that sell these securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction before the purchase. Further, if the price of the stock is below $5.00 per share and the issuer does not have $2.0 million or more net tangible assets or is not listed on a registered national securities exchange, sales of that stock in the secondary trading market are subject to certain additional rules promulgated by the U.S. Securities and Exchange Commission. These rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices, and disclosure of the compensation to the broker-dealer and the salesperson working for the broker-dealer in connection with the transaction. These rules and regulations may affect the ability of broker-dealers to sell our common stock, thereby effectively limiting the liquidity of our common stock. These rules may also adversely affect the ability of persons that acquire our common stock to resell their securities in any trading market that may exist at the time of such intended sale.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We are not required to provide the information called for by this item.
ITEM 2.
ITEM 2. PROPERTIES
We have closed our Heyburn, Idaho facilities and office, which were leased from Whistling Pete Enterprises, d/b/a Legacy Center, an Idaho limited liability company. The triple net lease, which commenced March 2, 2009, is a year-to-year lease. During the year ended December 31, 2019, we paid $1,200 per month in rent, plus our proportionate share of utilities, taxes, and common area maintenance expense, for 1,800 square feet of office and warehouse space. Whistling Pete Enterprises is owned 50% by Mark D. Williams, our president and director.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
However, on June 27, 2019, we were served with Petitioner’s Motion to Join 20/20 Global as a Necessary Third-Party Respondent to the Present Action, and to Enforce the Judgment Entered October 9, 2018, by Ordering 20/20 Global, Inc., to Turn Over Marital Securities Earned by Respondent and Awarded to Petitioner and a Subpoena for Deposition (Records only) in the matter of In re the Marriage of Penni Gruenberg v. Myron Gruenberg, Case No. 17 D 3662, pending in the Circuit Court of Cook County, Illinois. Petitioner sought return of the shares originally represented by certificates nos. 539 and 540, which were returned by Mr. Gruenberg and cancelled by us after termination of our
agreement with him for his failure to perform under the Master Services Agreement. We did not believe Mr. Gruenberg is entitled to the shares and, therefore, they could not be awarded to his spouse in litigation and vigorously defended this position. On March 6, 2020, an agreed order was entered whereby Penni Gruenberg voluntarily withdrew her petition in accordance with the terms of the settlement agreement dated March 4, 2020. Per the terms of the settlement, we paid $40,000 to Ms. Gruenberg.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
This item is not applicable to our business.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES
Market Information
Our common stock is quoted on the Pink tier of the OTC Markets Group under the trading symbol “TWGL.” These over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions. Since our inception, the sporadic trading activity in our common stock and the price fluctuations have been volatile, and we cannot assure that any market for our common stock will be maintained.
We have approximately 110 stockholders of record of our common stock. As of April 9, 2021, we had 12,925,420 shares of our common stock issued and outstanding.
Holders of shares of common stock are entitled to receive dividends for our common stock when, as, and if declared by the board of directors out of funds legally available therefor. We have not paid any dividends on our common stock and intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the board of directors and will depend upon a number of factors, including future revenues, capital requirements, overall financial condition, and such other factors as our board of directors deems relevant.
Our shares of common stock are subject to the “penny stock” and other rules of the Securities Exchange Act of 1934, as amended (“Exchange Act”). In general terms, “penny stock” is defined as any equity security that has a market price less than $5.00 per share that is not traded on a national securities exchange or that has an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker-dealers that sell these securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse).
Transactions covered by these rules are subject to additional sales practice requirements, including the broker-dealer must make a special suitability determination for the purchase of these securities and have received the purchaser’s written consent to the transaction before the purchase. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock, to the extent it is penny stock, and may affect the ability of stockholders to sell their shares.
Equity Compensation Plan
We do not have any securities authorized under equity compensation plans.
Recent Sales of Unregistered Securities
None.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
We are not required to provide the information called for by this item.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion of our financial condition and results of operations should be read in conjunction with the audited and unaudited financial statements and the notes to those statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. You should specifically consider the various risk factors identified in this report that could cause actual results to differ materially from those anticipated in these forward-looking statements.
Results of Operations
Comparison of Years Ended December 31, 2020 and 2019
Sales and Cost of Sales
Due to the termination of our fresh produce business, we did not have any revenue or cost of revenue from continuing operations for the years ended December 31, 2020 and 2019.
Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the years ended December 31, 2020 and 2019, consisted of general and administrative expenses of $42,965 and $123,576, respectively; salaries and wages of $86,455 and $119,298, respectively; and payroll taxes of $5,029, and $8,844, respectively, and stock based compensation of $44,608 and $0, respectively. General and administrative expenses consisted primarily of rent expense, professional fees, stock-based compensation and insurance costs. Our decrease in general and administrative expenses is the result of the discontinuance of our fresh produce distribution business and the pursuit of other business opportunities. The Company has employed cost savings strategies as we seek to find another active business that may be interested in acquiring us.
Other Income (Expense) from Continuing Operations
Other income of $2,214 for the year ended December 31, 2020 consisted of interest income. Other expense of $1,504 for the year ended December 31, 2019, consisted primarily of $16,253 of interest income and a $22,251 credit for the provision of income tax, which were offset with a $40,000 loss on a legal settlement.
Net Loss from Continuing Operations
We had a net loss from continuing operations for the years ended December 31, 2020 and 2019, of $157,235 and $253,222, respectively.
Net Income from Discontinued Operations
Net loss from discontinued operations for the year ended December 31, 2020 was $84,970. Net income from discontinued operations for the year ended December 31, 2019 was $258,025, due to the following:
From discontinued operations, we had revenue for the year ended December 31, 2020 and 2019, of $0 and $12,283,783, respectively. Our corresponding cost of revenues for the years ended December 31, 2020 and 2019, was $0 and $11,612,910, respectively. Gross profit for the same periods was $0 and $670,873, respectively.
Operating expenses from discontinued operations for the years ended December 31, 2020 and 2019, consisted of general and administrative expenses of $27,204 and $113,698, respectively; business development expenses of $0 and $42,080, respectively; salaries and wages of $57,766 and $212,500, respectively; and sales/marketing expenses of $0 and $27,967, respectively; and payroll taxes of $0, and $16,478, respectively.
Other income and from discontinued operations for the years ended December 31, 2020 and 2019, was $0 and $17,275, respectively. Provision for income tax expense from discontinued operations for the years ended December 31, 2020 and 2019 was $0 and $17,400, respectively.
Liquidity and Capital Resources
As of December 31, 2020, we had working capital of $454,306, down from working capital of $651,355 as of December 31, 2019. Our current assets of $455,455 consisted mainly of cash and a deposit for our acquisition of Mycotopia Therapies, Inc. We had retained earnings of $371,027 as of December 31, 2020, down from retained earnings of $613,232 as of December 31, 2019.
Operating activities used net cash of $302,805 for the year ended December 31, 2020, as compared to providing net cash of $98,667 for the year ended December 31, 2019. Investing activities used net cash of $349,000 and $1,000, respectively, for the years ended December 31, 2020 and 2019. We had a cash balance of $22,553 (net of $34,806 from discontinued operations) and $209,164 (net of $500,000 from discontinued operations) as of December 31, 2020 and 2019, respectively.
Our monthly operating costs averaged approximately $12,000 per month for the year ended December 31, 2020, excluding capital expenditures. We plan to fund our operations with our cash on hand.
Our consolidated financial statements have been prepared assuming we will continue as a going concern. We have discontinued our produce operations, and we are pursuing other business opportunities. Our ability to continue our operations as a going concern is dependent on management’s plans, which includes successfully integrating Mycotopia Therapies, Inc. which was acquired subsequent to December 31, 2020. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles in the United States, with no need for management’s judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations when such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see the notes to our December 31, 2020, financial statements. Note that our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. We cannot assure that actual results will not differ from those estimates.
Revenue Recognition and Cost of Goods Sold
Effective January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, we recognize revenue from the commercial sales of products and licensing agreements by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Our shipping terms typically specify FOB origination, at which time title and risk of loss have passed on to the customer as well as shipping and handling fees. Shipping and handling costs and fees are treated as a delivered load. On a delivered load versus an FOB load, we take the billing and pay the carriers. We contract with the carrier and, therefore, handle the shipping and handling charges and treat it as a “delivered sale.”
Income Taxes
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.
Share-based Expenses or Stock Based Compensation
We follow ASC Topic 718, Compensation-Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee 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 during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
We accounted for stock-based compensation issued to nonemployees and consultants in accordance with the provisions of ASC Topic 505-50, Equity-Based Payments to Non-Employees, until December 31, 2018. Measurement of share-based payment transactions with nonemployees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Upon the adoption of Accounting Standards Updates (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, we measured the fair value of equity instruments for nonemployee-based payment awards on the grant date.
Recently Issued Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, which allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our consolidated financial statements.
Recently issued accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that require adoption and that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are not required to provide the information called for by this item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements, including the Report of Independent Registered Public Accounting Firm on our consolidated financial statements, are included beginning on page of this report, which are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the U.S. Securities and Exchange Commission under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were not effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. There has been no change in our internal control over financial reporting during the year ended December 31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Our management, including our Certifying Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
We have assessed the effectiveness of those internal controls as of December 31, 2020, using the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework (2013) as a basis for our assessment. Based on this evaluation, our Certifying Officer concluded that our internal control over financial reporting was not effective as of December 31, 2020.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the U.S. Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following sets forth the name, age, tenure, and principal business experience of each of our executive officers and directors:
(1)Ben Kaplan was appointed as director and CEO and Mark Croskery was appointed as a director on January 20, 2021. Mark Williams and Colin Gibson resigned their respective positions on the same date.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and persons that own more than 10% of a registered class of our equity securities to file with the U.S. Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our equity securities. Officers, directors, and greater than 10% stockholders are required to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3, 4, and 5 and amendments thereto filed with the U.S. Securities and Exchange Commission since our registration statement on Form 10 became effective, no person that, at any time during the most recent fiscal year, was a director, officer, beneficial owner of more than 10% of any class of our equity securities, or any other person known to be subject to Section 16 of the Exchange Act failed to file, on a timely basis, reports required by Section 16(a) of the Securities Exchange Act, except that our chief executive officer and director Mark D. Williams failed to report the transfer of 143,049 shares of his stock to his grandchildren.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, including our principal executive officer, principal financial officer, and principal accounting officer, a copy of which is included as an exhibit to this report.
Committees of the Board
We currently do not have nominating, compensation, or audit committees or committees performing similar functions and we do not have a written nominating, compensation, or audit committee charter. Our board of directors believes
that it is not necessary to have these committees, at this time, because the directors can adequately perform the functions of such committees.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for each of our last two completed fiscal years, the dollar value of all cash and noncash compensation earned by any person who was our principal executive officer and each of our three most highly compensated other executive officers or persons who were serving in such capacities during the preceding fiscal year (“Named Executive Officers”):
Executive Employment Agreements
We do not have any employment agreements with our executive officers.
Outstanding Equity Awards at Fiscal Year End
We do not have any outstanding equity awards, pension plans, or other pension benefits, and there are no potential change-of-control payouts to any person.
We do not provide any long-term incentives, any stock options or awards, or any kind of additional equity awards.
Director Compensation
We did not compensate our directors for attendance at our board meetings during 2020.
Employee Benefits
In August 2014, we adopted a Premier Select Simple IRA Plan for our employees, which is available to certain eligible employees. We contribute 2% of compensation, not to exceed certain limits, for employees who participate in the IRA plan. During the years ended December 31, 2020 and 2019, we contributed $0 and $5,256, respectively, to the IRA Plan.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information, as of December 31, 2020, respecting the beneficial ownership of our outstanding common stock by: (i) any holder of more than 5%; (ii) each of the Named Executive Officers (defined as any person who was principal executive officer during the preceding fiscal year and each other highest compensated executive officers earning more than $100,000 during the last fiscal year) and directors; and (iii) our directors and Named Executive Officers as a group, based on 12,925,420 shares of common stock outstanding:
_______________
(1)Address for all stockholders is 480 22nd Street, Box 2, Heyburn, ID 83336.
Subsequent to December 31, 2020, Ehave, Inc. purchased 9,793,754 shares of common stock in the aggregate from The Robert and Joanna Williams Trust, Mark Williams and Colin Gibson. Following the transaction, Mark Williams continued to hold 1,000,000 shares of common stock.
The persons named in the above table have sole voting and dispositive power respecting all shares beneficially owned, subject to community property laws where applicable. Beneficial ownership is determined according to the rules of the U.S. Securities and Exchange Commission, and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power over that security. Each director, officer, or 5% or more stockholder, as the case may be, has furnished the information respecting beneficial ownership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information is set forth below for any transaction during the three years ended December 31, 2019, to which we were a party and in which any of our officers and directors or any holder of more than 10% of any class of our stock had or is deemed to have a material interest.
Related-Party Transactions
Until December 31, 2019, we leased 1,800 square feet of office and warehouse space from Whistling Pete Enterprises, d/b/a Legacy Center, an Idaho limited liability company, under a year-to-year lease that commenced March 2, 2009, for $1,200 per month, plus utilities. Whistling Pete Enterprises is owned 50% by Mark Williams, our president and a director. We paid lease payments under this lease of approximately $19,000 during the years ended December 31, 2020 and 2019, respectively.
On April 1, 2019, we entered into a lease agreement with Colin Gibson, our director, for the lease of an automobile. The lease was considered an operating lease, required monthly payments of $350, and had a term of six years. However, the lease was cancelled as of December 31, 2019.
On July 20, 2020, we granted 500,000 shares of common stock to Mark Williams for consideration relating to the winding down of our operations. The shares were valued at $0.05 for total noncash expense of $25,000.
Director Independence
Under the definition of independent directors found in Nasdaq Rule 5605(a)(2), which is the definition we have chosen to apply, none of our directors is independent.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The firm of Pinnacle Accountancy Group of Utah (a dba of Heaton & Co., PLLC) has served as our independent registered public accounting firm since the year ended December 31, 2016. We anticipate that representatives of Pinnacle Accountancy Group of Utah will be present at any annual meeting and will be provided the opportunity to make a statement, if they desire to do so, and respond to appropriate questions.
Audit Fees
For our fiscal year ended December 31, 2020, we were billed approximately $16,500 for professional services rendered for the audit and reviews of our consolidated financial statements. For our fiscal year ended December 31, 2019, we were billed approximately $27,250 for professional services rendered for the audit and reviews of our consolidated financial statements.
Audit Related Fees
For our fiscal years ended December 31, 2020 and 2019, we did not incur any audit-related fees.
Tax Fees
For our fiscal years ended December 31, 2020 and 2019, we were billed $0 and $0, respectively, for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
We did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2020 and 2019.
Audit and Non-Audit Service Preapproval Policy
In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, our board of directors has adopted an informal approval policy that it believes will result in an effective and efficient procedure to preapprove services performed by the independent registered public accounting firm.
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
Audit Services
Audit services include the annual financial statement audit (including quarterly reviews) and other procedures required to be performed by the independent registered public accounting firm to be able to form an opinion on our consolidated financial statements. The board of directors preapproves specified annual audit services engagement terms and fees and other specified audit fees. All other audit services must be specifically preapproved by the board of directors. The board of directors monitors the audit services engagement and may approve, if necessary, any changes in terms, conditions, and fees resulting from changes in audit scope or other items.
Audit-Related Services
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements, which historically have been provided to us by the independent registered public accounting firm and are consistent with the Securities and Exchange Commission’s rules on auditor independence. The board of directors preapproves specified audit-related services within preapproved fee levels. All other audit-related services must be preapproved by the board of directors.
Tax Services
The board of directors preapproves specified tax services that it believes would not impair the independence of the independent registered public accounting firm and that are consistent with Securities and Exchange Commission’s rules and guidance. The board of directors must specifically approve all other tax services.
All Other Services
Other services are services provided by the independent registered public accounting firm that do not fall within the established audit, audit-related, and tax services categories. The board of directors preapproves specified other services that do not fall within any of the specified prohibited categories of services.
Procedures
All proposals for services to be provided by the independent registered public accounting firm, which must include a detailed description of the services to be rendered and the amount of corresponding fees, are submitted to the board of directors and the chief financial officer. The chief financial officer authorizes services that have been preapproved by the board of directors. The chief financial officer submits requests or applications to provide services that have not been preapproved by board of directors, which must include an affirmation by the chief financial officer and the independent registered public accounting firm that the request or application is consistent with the Securities and Exchange Commission’s rules on auditor independence, to board of directors for approval.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)The following financial statements are filed as part of this report:
Page
Audited Consolidated Financial Statements for the
Years Ended December 31, 2020 and 2019:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the Years Ended
December 31, 2020 and 2019
Consolidated Statements of Changes in Stockholders’ Equity for the
Years Ended December 31, 2020 and 2019
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2020 and 2019
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
20/20 Global, Inc.
Heyburn, ID 83336
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of 20/20 Global, Inc. (the Company) as of December 31, 2020 and 2019, and the related statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has discontinued its only revenue stream, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding this matter are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Basis of Presentation and Going Concern - Disclosure
The consolidated financial statements of the Company are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company has had recurring net losses and negative cash flows from operations. Currently management’s forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures, a merger with an existing operating company, and if necessary, obtaining additional debt financing, loans from existing directors and shareholders and private placements of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to access such financing or a merger is not consummated, the Company can manage cash outflows to meet the obligations through reductions in capital expenditures and other operating expenditures.
We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments to conclude that it is probable that the Company’s plans will be effectively implemented and will provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity in determining it is probable that the Company’s plans will be effectively implemented including its ability to reduce or delay capital expenditures and other operating expenditures, its ability to access funding from the capital market, its ability to obtain loans from existing directors and shareholders, and the potential for a business combination via a currently-pending agreement and plan of merger with a target operating company. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included the following, among others: (i) evaluating the probability that the Company will be able to access funding from the capital market; (ii) evaluating the probability that the Company will be able to reduce capital expenditures and other operating expenditures if required (iii) evaluating the probability that the Company will be able to obtain loans from existing directors and shareholders, and (iv) evaluating the existence of an agreement and plan of merger with a target operating company.
/s/ Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2016.
Pinnacle Accountancy Group of Utah
Farmington, Utah
April 14, 2021
20/20 GLOBAL, INC.
Consolidated Balance Sheets
See accompanying notes to the consolidated financial statements.
20/20 Global, Inc.
Consolidated Statements of Operations
See accompanying notes to the consolidated financial statements.
20/20 GLOBAL, INC.
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2020 and 2019
See accompanying notes to the consolidated financial statements.
20/20 Global, Inc.
Consolidated Statements of Cash Flows
See accompanying notes to the consolidated financial statements.
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization and Business Activity
We were incorporated in Nevada on January 21, 2000, under the name RM Investors, Inc. On March 15, 2014, under the terms of an Exchange Agreement and Plan of Reorganization, we acquired 100% of the issued and outstanding shares of our subsidiary 20/20 Produce Sales, Inc., an Idaho corporation that was incorporated on December 22, 1994. Our business operations are conducted through our wholly owned subsidiary. In connection with this reorganization, we obtained a new CUSIP number for our common stock, FINRA approval of our name change from RM Investors, Inc. to 20/20 Global, Inc. and a new trading symbol for our shares on the OTC market place, and effected a 2-for-1 forward split of the then-issued and outstanding shares of our common stock.
In December 2020, we entered into definitive agreements with Ehave, Inc., an Ontario corporation, Mycotopia Therapies Inc., a Florida corporation and wholly owned subsidiary of Ehave, Inc., and the former and current directors of 20/20 Global that provide for the 20/20 Global’s purchase of all of the outstanding stock of Mycotopia Therapies, Inc. from Ehave, Inc. (see Note 10).
Since the reverse merger on January 20, 2021 (the “Closing”), the Company has been leveraging its relationship with its parent company, Ehave, Inc. (“EHVVF”) to integrate the use of digital and data therapeutics to measure the effect of Psylicibin and related compounds on mental health.
Our accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. However, we have recently been forced to discontinue our only revenue stream, which raises substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of 20/20 Global, Inc. and our wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in these consolidated financial statements.
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.
Reclassifications
The prior-year amounts have been modified in these financial statements to properly report amounts under current operations and discontinued operations (see Note 9).
Cash and Cash Equivalents
We consider all highly liquid investments with original maturities of less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value, to be cash equivalents.
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
Accounts Receivable and Doubtful Accounts
Accounts receivable are stated at invoice value, which is net of any off-invoice promotions. A provision for doubtful accounts is recorded and based upon an assessment of credit risk within the accounts receivable portfolio, experience of delinquencies and charge-offs, and current market conditions. Management believes these provisions are adequate based upon the relevant information presently available. The allowance provided for the years ended December 31, 2020 and 2019 was $0. The write-offs for the years ended December 31, 2020 and 2019, were $0 and $15,440, respectively
Inventory
Substantially all inventories are stated at cost at the lower of first-in, first-out (“FIFO”) method or market. Inventory consists of packaging/raw materials.
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 $548 and $323 for the years ended December 31, 2020 and 2019, 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 2020 and 2019.
Revenue Recognition
The Company follows Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the company expects to receive in exchange for those goods. We apply the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation.
We only apply the five-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to our customer. Once a contract is determined to be within the scope of ASC Topic 606, at contract inception we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, our performance obligations are transferred to customers at a point in time, typically upon delivery.
Our shipping terms typically specify FOB origination, at which time title and risk of loss, as well as shipping and handling fees, have passed on to the customer. Shipping and handling costs and fees are treated as a delivered load. On a delivered load versus an FOB load, we actually take the billing and pay the carriers. We contract with the carrier and, therefore, handle the shipping and handling charges and treat them as a “delivered sale.”
Sales to our largest customer amounted to approximately 58% of our total net sales in 2019, and our top two customers collectively accounted for approximately 92% of our total net sales. Approximately 54% of our total accounts receivable as of December 31, 2019, was due from our largest customer.
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
Fair Value of Financial Instruments
We follow FASB ASC subtopic 825-10-50-10, Financial Instruments-Overall-Disclosure, for disclosures about fair value of our financial instruments and subtopic 820-10-35-37, Fair Value Measurement-Overall-Subsequent Measurement, to measure the fair value of our financial instruments.
Subtopic 820-10-35-37 establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, subtopic 820-10-35-37 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by subtopic 820-10-35-37 are described below:
Level 1:
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2:
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3:
Pricing inputs that are generally unobservable inputs and not corroborated by market data.
The carrying amount of our financial assets and liabilities, such as cash, prepaid expenses, and accrued expenses approximate their fair value because of the short maturity of those instruments.
Income Taxes
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.
Share-based Expenses or Stock Based Compensation
We follow ASC Topic 718, Compensation-Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee 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 during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
Upon the adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, we measured the fair value of equity instruments for nonemployee-based payment awards on the grant date.
Income (Loss) per Share
Basic income per common share equals net income (loss) divided by weighted average common shares outstanding during the period. Diluted income (loss) per share includes the impact on dilution from all contingently issuable shares, including options, warrants, and convertible securities, and is not presented if anti-dilutive. The common stock equivalents from contingent shares are determined by the treasury stock method.
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
The computation of diluted loss per share for the year ended December 31, 2020 excludes 400,000 shares of common stock issuable under outstanding exercisable stock options. We had no potentially dilutive securities as of December 31, 2019.
Recent Accounting Pronouncements
We have reviewed recently issued accounting pronouncements and plan to adopt those that are applicable to us. We do not expect the adoption of any pronouncements to have an impact on our results of operations or financial position.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared on the assumption that we will continue as a going concern. As discussed in Note 1, we have discontinued our operations as of December 31, 2020. We had a net loss of loss of $157,235 from continuing operations for the year ended December 31, 2020. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue our operations as a going concern is dependent on management’s plans, which includes successfully integrating Mycotopia Therapies, Inc. which was acquired subsequent to December 31, 2020. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.
NOTE 4 - LEASE
On April 1, 2019, we entered into a lease agreement with Colin Gibson, director, for the lease of an automobile. The lease was considered an operating lease, required monthly payments of $350, and had a term of six years. We had accounted for the lease under ASU 842, Leases; however, the lease was cancelled as of December 31, 2019. As a result of the cancellation, both the right of use asset and the lease liability were removed with no gain or loss.
The lease expense for the year ended December 31, 2019, was $3,150, which consisted of amortization expense of $1,682 and interest expense of $1,468. The cash paid under our operating lease during the year ended December 31, 2019, was $3,150. We have used a discount rate of 8%, which is our deemed incremental borrowing rate.
NOTE 5 - RELATED-PARTY TRANSACTIONS
We lease our office from Whistling Pete Enterprises, d/b/a Legacy Center, an Idaho limited liability company. The lease, which commenced on March 2, 2009, at a rate of $1,200 per month plus utilities. Subsequent to December 31, 2020 the lease was terminated at no cost. In accordance with ASC 842, leases, we elected to exclude short-term leases, or leases with a term of twelve months or less that do not contain a purchase option that we are reasonably certain to exercise, from our ROU asset and lease liability calculations. Whistling Pete Enterprises is owned 50% by Mark Williams, our president. Total lease payments were approximately $19,000 during the years ended December 31, 2020 and 2019, respectively.
On July 20, 2020, we granted 500,000 shares of common stock to Mark Williams for consideration relating to the winding down of our operations. The shares were valued at $0.05 for total noncash expense of $25,000.
NOTE 6 - EMPLOYER IRA PLAN
In August 2014, we adopted a Premier Select Simple IRA Plan, which covers all eligible employees who choose to participate. We contribute 2% of compensation, not to exceed certain limits, for employees who participate in the IRA Plan. During the years ended December 31, 2020 and 2019, we contributed $0 and $5,256, respectively, to the IRA Plan.
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
NOTE 7 - INCOME TAXES
We recognize the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not of being realized upon ultimate settlement with a taxing authority. We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the years ending December 31, 2019 and 2018.
We join in filing a consolidated income tax return with our subsidiary. We have allocated federal income taxes by applying 21% for the years ending December 31, 2019 and 2018, respectively, and state income taxes by applying 7.4% to our taxable income.
We comply with GAAP, which requires the determination of deferred income taxes using an asset and liability approach, whereby deferred tax liabilities and assets are recognized for expected future tax consequences of temporary differences between carrying amounts and tax basis of asset and liabilities. Deferred balances are adjusted to reflect enacted changes in income tax rates. We do not have any deferred income taxes.
The provision for federal and state income taxes is associated with and included in net income from discontinued operations and consists of the following components:
The reconciliation between income taxes at the U.S. federal and state statutory rates of approximately 28.4% and the amount recorded in the accompanying consolidated financial statements is as follows:
We comply with GAAP, which requires the determination of deferred income taxes using an asset and liability approach, whereby deferred tax liabilities and assets are recognized for expected future tax consequences of temporary differences between carrying amounts and tax basis of asset and liabilities. Deferred balances are adjusted to reflect enacted changes in income tax rates. Due to the likelihood that the deferred assets will not be realized, a full valuation allowance has been recorded. Deferred tax assets are as follows
The company has net operating losses amounting to $238,638 for federal and Idaho which can be carried forward indefinitely but are limited to 80% usage.
Each of the last three tax years we have been in operation is subject to examination by the Internal Revenue Service.
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
NOTE 8 - 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.
Stock options
On November 20, 2020, the Company issued for services rendered a stock option to purchase 400,000 shares of the Company’s common stock with an exercise price of $0.001 per share and a term of one year. The option was fully vested upon grant. During the year ended December 31, 2020, the Company recorded $19,608 as general and administrative expense in the Company’s consolidated statements of operations. As of December 31, 2020 there was no unrecognized costs for options outstanding. The Company valued the options using the Black-Scholes options pricing model using the following assumptions: 1) expected term of one year, 2) expected volatility of 157%, 3) risk-free interest rate of 0.11%, and 4) dividend yield of 0%.
Subsequent to the year ending December 31, 2020, the Company transferred the option to the Company’s former CEO, it was exercised, and was settled in third-party shares, in full.
As of and for the year ending December 31, 2019, the Company had no stock option activity and no stock options outstanding.
NOTE 9 - DISCONTINUED OPERATIONS
On July 1, 2019, Performance Food Group Company (“PFG”) announced that it entered into a definitive agreement to acquire Reinhart Foodservice, LLC (“Reinhart”) from Reyes Holdings, LLC. Reinhart is a principal purchaser of our fresh produce distribution business. On December 20, 2019, PFG received approval from the Federal Trade Commission to acquire Reinhart and closed the transaction on December 30, 2019. Most of our business through our License Agreement with Markon Cooperative is purchased by Reinhart. Although our Markon License Agreement has not been terminated, PFG notified us that it will use its existing suppliers, which do not include us. Since this agreement that generates over half of our existing business is effectively terminated, we decided to discontinue our fresh produce distribution business, and we have notified all of our vendors and suppliers that we will not conduct new business with them after December 27, 2019.
In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of December 31, 2020 and 2019, and consist of the following:
In accordance with the provisions of ASC 205-20, we have not included the results of operations from discontinued operations in the results of continuing operations in the consolidated statements of operations. The results of operations
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
from discontinued operations for the years ended December 31, 2020 and 2019, have been reflected as discontinued operations in the consolidated statements of operations for the years ended December 31, 2020 and 2019, and consist of the following.
In accordance with the provisions of ASC 205-20, we have included the net cash provided by discontinued operations in the consolidated statements of cash flows. The net cash provided by discontinued operations in the consolidated statements of cash flows for the years ended December 31, 2019 and 2018, consist of the following.
NOTE 10 - LEGAL PROCEEDINGS
On June 27, 2019, the Company was served with Petitioner’s Motion to Join 20/20 Global as a Necessary Third-Party Respondent to the Present Action, and to Enforce the Judgment Entered October 9, 2018, by Ordering 20/20 Global, Inc., to Turn Over Marital Securities Earned by Respondent and Awarded to Petitioner and a Subpoena for Deposition (Records only) in the matter of In re the Marriage of Penni Gruenberg v. Myron Gruenberg, Case No. 17 D 3662,
20/20 GLOBAL, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
pending in the Circuit Court of Cook County, Illinois. Petitioner sought return of the shares originally represented by certificates nos. 539 and 540, which were returned by Mr. Gruenberg and cancelled by us after termination of our agreement with him for his failure to perform under the Master Services Agreement. We did not believe Mr. Gruenberg is entitled to the shares and, therefore, they could not be awarded to his spouse in litigation and vigorously defended this position. On March 6, 2020, an agreed order was entered whereby Penni Gruenberg voluntarily withdrew her petition in accordance with the terms of the settlement agreement dated March 4, 2020. Per the terms of the settlement, we paid $40,000 to Ms. Gruenberg which was recorded as loss on legal settlement as an other expense in the Company’s consolidated statements of operations for the year ending December 31, 2019.
NOTE 11 - SUBSEQUENT EVENTS
In December 2020, we entered into definitive agreements with Ehave, Inc., an Ontario corporation (“Ehave”), Mycotopia Therapies Inc., a Florida corporation and wholly owned subsidiary of Ehave (“MYC”), and the former and current directors of 20/20 Global that provide for: (i) 20/20 Global’s purchase for $350,000 in cash of all of the outstanding stock of MYC from Ehave under a Stock Purchase Agreement, resulting in MYC becoming a wholly owned subsidiary of 20/20 Global; and (ii) the change of control of 20/20 Global’s board of directors and management under a Change of Control and Funding Agreement. In a related transaction, Ehave agreed to purchase 9,793,754 shares of 20/20 Global common stock, which constitute approximately 75.77% of the issued and outstanding shares of 20/20 Global’s common stock, for $350,000 in cash through a Stock Purchase Agreement (“MYC SPA”) with 20/20 Global stockholders Mark D. Williams, Colin Gibson, and The Robert and Joanna Williams Trust. Prior to these transactions, neither 20/20 Global nor its officers and directors had a material relationship with Ehave, MYC, or their respective officers and directors.
All of the above transactions were closed on January 19, 2021.
As a result of the MYC SPA, MYC became a wholly owned subsidiary of 20/20 Global, through which we plan to conduct our operations. MYC is a start-up enterprise that proposes to develop a business to provide psychedelic-enhanced holistic methodologies to improve mental wellbeing. In the next five years, our business model will focus on the following areas: palliative care, depression, and anxiety. We will leverage our minority equity interest in PsychedeliTech Inc. and our relationship with Ehave Inc. to create new opportunities for our shareholders and partners. We hope to license and acquire access to technology and companies that will build added value for our company as this industry matures.
The following table provides unaudited pro forma results for the years ended December 31, 2020 and 2019, as if the Stock Purchase Agreement consummated on January 1, 2019. The pro forma results of operations for these periods ended were prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the Stock Purchase Agreement been made as of January 1, 2019 or results that may occur in the future.
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, Subsequent Events, from the balance sheet date through the date the financial statements were issued and has determined that no additional material subsequent events exist.
(b)The following exhibits are filed as part of this report:
Item 101**
Interactive Data File
101.INS
XBRL Instance Document
This filing.
101.SCH
XBRL Taxonomy Extension Schema
This filing.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
This filing.
101.DEF
XBRL Taxonomy Extension Definition Linkbase
This filing.
101.LAB
XBRL Taxonomy Extension Label Linkbase
This filing.
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*
All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document.
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Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.