20-F/A: Ehave Inc. Restates 2021 Financials Due to Accounting Errors

Ehave, Inc. has filed an amendment to its 2021 annual report to restate financial statements due to errors in accounting for stock compensation, convertible notes, and fixed assets.

Summary

• Ehave, Inc. filed an amendment to its 2021 annual report on Form 20-F/A to restate its consolidated balance sheet and statement of operations.
• The restatement addresses errors related to the fair value of common stock issued, convertible notes, fixed assets, and an employment agreement with the CEO.
• The company recorded an additional stock-based compensation expense of $2,029,861 related to a warrant issued to the CEO.
• The evaluation of these accounting issues was completed on April 25, 2023, leading to the filing of Amendment No. 1.
• The company had no revenue from continuing operations for the years ended December 31, 2021 and 2020.
• The net losses were $11,481,906 and $3,514,736 for the years ended December 31, 2021 and 2020, respectively.
• As of December 31, 2021, the company had an accumulated deficit of $29,966,387.
• The company raised approximately $3,014,000 in 2021 through convertible notes, warrants, and a Regulation A offering.
• The company anticipates continuing to incur significant expenses and operating losses over the next several years.
• As of December 31, 2021, the company's cash balance was $2,350,741, and it had a working capital deficit of $872,988.
• There is substantial doubt about the company's ability to continue as a going concern.

Sentiment

Score: 2

Explanation: The sentiment is negative due to the restatement of financials, significant losses, accumulated deficit, working capital deficit, and going concern uncertainty. While the company is pursuing growth initiatives, the financial risks outweigh the potential positives.

Positives

• The company raised $3,014,000 in 2021 to fund operations.
• The company is developing MegaTeam, NinjaReflex, and KetaDash products.

Negatives

• The company restated its 2021 financial statements due to accounting errors.
• The company incurred a net loss of $11,481,906 in 2021.
• The company has an accumulated deficit of $29,966,387 as of December 31, 2021.
• The company has a working capital deficit of $872,988 as of December 31, 2021.
• There is substantial doubt about the company's ability to continue as a going concern.

Risks

• The company may not have sufficient resources to fund operations through the third quarter of 2022.
• The company's ability to obtain additional financing through public or private sales of securities could be adversely affected if it fails to maintain eligibility for quotation on the OTCQB Venture Market.
• Future financing may involve substantial dilution to existing investors.
• The company may need to reduce activities, curtail, or cease operations if it is unsuccessful in commercializing its products and raising capital.

Future Outlook

The company expects to continue to incur significant expenses and operating losses over the next several years as it continues development and commercialization of its products and engages in research and development.

Industry Context

The company operates in the medical psychedelics and mental health data platform space, which is a growing area of interest. The company is creating a medical psychedelics and mental health data platform that integrates with proprietary and third-party assessment and therapeutic digital applications.

Comparison to Industry Standards

• It is difficult to compare Ehave's results directly to industry standards without specific competitor data.
• However, the company's focus on digital assessment and rehabilitation software aligns with trends in telehealth and digital therapeutics.
• The company's financial performance, particularly its losses and going concern uncertainty, suggests it is underperforming compared to more established companies in the broader healthcare technology sector.

Related Party Transactions

• The company entered into an Executive Consulting Agreement with Benjamin Kaplan, the company's CEO.
• Mycotopia entered into an Executive Consulting Agreement with Benjamin Kaplan.
• The company entered into a consulting agreement with the company's CFO, James Cardwell.
• The company entered into an executive employment agreement with the Chief Technology Officer.

Stakeholder Impact

• Shareholders may experience dilution if the company raises additional capital through equity offerings.
• Employees' jobs may be at risk if the company is unable to continue as a going concern.
• The company's ability to deliver products and services to customers may be impacted if it is unable to secure sufficient funding.

Next Steps

• The company plans to continue commercialization of its products.
• The company plans to raise capital through a combination of equity offerings, debt financings, other third-party funding, and other collaborations and strategic partnerships.

Key Dates

Keywords

restatement, financial statements, convertible notes, stock compensation, going concern, Ehave, deficit, losses, financing, Mycotopia, KetaDash, MegaTeam, NinjaReflex