NOTE 5 - RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

NOTE 5 – RELATED PARTY TRANSACTIONS

Notes Payable – Related Parties

During the year ended December 31, 2020, the Company entered into two term promissory notes with Ehave, Inc. (a majority shareholder) in the amount of $125,000. During the year ended December 31, 2021, the Company entered a term promissory note with Ehave, Inc. in the amount of $500,000. The notes mature two years after the issuance date and bear an interest rate of 1.75% per year. During the year ended December 31, 2022, the Company repaid the $625,000 in outstanding principal and interest due on the three promissory notes. As of December 31, 2023 and 2022, the Company had no balances outstanding in connection with these notes. During the years ended December 31, 2023 and 2022, the Company recorded interest expense of $0 and $7,203, respectively, in relation to these notes.

Mycotopia Consulting Agreement with the CEO

On November 17, 2021, Mycotopia entered into an Executive Consulting Agreement (the “Mycotopia Consulting Agreement”), with Benjamin Kaplan (“BK”) to serve as the Company’s CEO for an initial term of 36 months. As of December 31, 2023 and 2022, the Company had cash compensation outstanding as accrued expense - related party due to the Mycotopia Consulting Agreement of $576,000 and $288,000, respectively. During the years ended December 31, 2023 and 2022, the Company recognized $635 and $148,417, respectively, of stock-based compensation from Warrants issued in connection with the Mycotopia Consulting Agreement. The Company records stock-based compensation on the consolidated income statement as general and administrative expense.

Significant terms of the Mycotopia Consulting Agreement are as follows:

Annual Base Consulting Fee

Every calendar month the Company will pay the CEO a consulting fee of $24,000, with an annual total fee of $288,000.

Bonus Compensation Milestones

The CEO was granted a Warrant to purchase that number of shares of Mycotopia common stock equal to 5% of the issued and outstanding Mycotopia common shares, on a fully diluted basis. The Warrant had an exercise price of $0.01 per share and expired on November 16, 2023.

During the years ended December 31, 2023 and 2022, the Company issued 1,922 and 63,718, respectively, vested Mycotopia warrant shares in accordance with the Warrant valued at $635 and $148,417, respectively (see Note 7 – Stockholders’ Equity).

The Company will pay the CEO a bonus in Mycotopia restricted stock or restricted stock units based on the following EBITDA milestones. As of December 31, 2023, no EBITDA milestones were met, and no amounts have been recorded for the bonus milestones.

Bonus		EBITDA Milestones
$	100,000	1st $1,000,000
$	100,000	2nd $1,000,000
$	100,000	3rd $1,000,000
$	100,000	4th $1,000,000
$	100,000	5th $1,000,000

The Company will pay the CEO a bonus in restricted stock or restricted stock units based on the following Mycotopia market capitalization by maintaining the below market cap for Mycotopia for a period of 22 consecutive trading days:

Bonus (Shares)	Market Capitalization Milestone
250,000	$	30,000,000
250,000	$	40,000,000
250,000	$	60,000,000
250,000	$	80,000,000
250,000	$	100,000,000

Stock Grants – Significant Transactions

Upon the Company closing a Significant Transaction, the CEO shall be granted shares of Mycotopia common stock or a new series of Mycotopia preferred shares that is convertible into Mycotopia common stock equal to 5% of the value of all the consideration, including any stock, cash or debt of such completed transaction. A “Significant Transaction” shall mean a financing of at least $500,000 or the closing of an acquisition with a valuation of at least $1,000,000 for Mycotopia. During the years ending December 31, 2023 and 2022, the Company did not grant any shares in relation to a Significant Transaction.

As of December 31, 2023, there are no amounts accrued related to the bonuses.

Board Compensation

As of December 31, 2023 and 2022, the Company had accrued expenses from board compensation of $250,000 and $135,000, respectively. Accrued board compensation is included as part of Accounts payable and accrued expenses on the consolidated balance sheets.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

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+ Details

Mycotopia Therapies, Inc. 10-K