UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
Commission File Number:
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___________________________________
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Securities registered pursuant to Section 12(b) of the Act:
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| Emerging Growth Company |
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Securities registered pursuant to Section 12(b) of the Act: None.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: shares of common stock par value $0.001, were outstanding as at as of February 14, 2022.
STAR ALLIANCE INTERNATIONAL CORP.
FORM 10-Q
Quarterly Period Ended December 31, 2021
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1 .Financial Statements
STAR ALLIANCE INTERNATIONAL CORP.
BALANCE SHEETS
December 31, 2021 | June 30, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid stock for services | ||||||||
| Total current assets | ||||||||
| Property and equipment | ||||||||
| Mining claims | ||||||||
| Total other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Notes payable | ||||||||
| Loans payable – related parties | ||||||||
| Note payable – former related party | ||||||||
| Due to former related party | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (see footnotes) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, $ par value, authorized, issued and outstanding | – | – | ||||||
| Series A preferred stock, $ par value, authorized, and shares issued and outstanding, respectively | ||||||||
| Series B preferred stock, $ par value, authorized, issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued | ||||||||
| Stock subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ||||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
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STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| General and administrative – related party | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Consulting | ||||||||||||||||
| Director compensation | ||||||||||||||||
| Officer compensation | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on conversion of accrued salary | ( | ) | ||||||||||||||
| Gain on forgiveness of debt | ||||||||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
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STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020 AND 2021
(Unaudited)
Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid-in | Common Stock To Be | Stock Subscription | Accumulated | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Issued | Receivable | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Stock issued for services | – | – | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued for debt | – | – | ||||||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock issued for accrued officer compensation | – | – | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid-in | Common Stock To Be | Stock Subscription | Accumulated | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Issued | Receivable | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Stock issued for services | – | – | ||||||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Cash not collectible | – | – | – | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Stock issued for services | – | – | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
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STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Common stock issued for services | ||||||||
| Loss on conversion of debt | ||||||||
| Gain of forgiveness of debt | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds of borrowings from a related party | ||||||||
| Repayment to related party | ( | ) | ||||||
| Proceeds from the sale of common stock | ||||||||
| Proceeds from notes payable | ||||||||
| Payment on notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash at the beginning of period | ||||||||
| Cash at the end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| NON-CASH TRANSACTIONS: | ||||||||
| Conversion of debt | $ | $ | ||||||
| Common stock issued for prepaid services | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
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Star Alliance International Corp.
Notes to Unaudited Financial Statements
December 31, 2021
NOTE 1 – NATURE OF BUSINESS
Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada, for the purpose of acquiring and developing gold mining as well as certain other mining properties worldwide.
NOTE 2 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Presentation
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of operations for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Form 10-K for the fiscal year ended June 30, 2021, have been omitted.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 3 – GOING CONCERN
The unaudited accompanying financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying unaudited financial
statements, the Company has an accumulated deficit of $
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
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NOTE 4 – ACQUISITION
On August
13, 2019, The Company closed an Asset Purchase Agreement (the “APA”) with Troy Mining Corporation (“Troy”). Under
the APA, the company acquired
Under the Purchase Note, we paid $50,000 at the time of the closing, and are required to pay an additional $50,000 within sixty days of the closing, and $25,000 every other month thereafter, with the entire remaining amount due no later than March 31, 2020. In the event of default under the Purchase Note, all assets acquired under the APA will be forfeited back to Troy. We are current on all the terms of the agreement.
On October 9, 2019, a contract extension was agreed between Star Alliance International Corporation and Troy Mining Corporation. The agreement gives the Company 150 days to file an S-1 registration statement and obtain approval for the shares that are to be issued to the Troy shareholders to become free trading. The S-1 registration was filed on August 14, 2020.
On July 14, 2020 a contract extension was agreed between Star Alliance International Corporation and Troy Mining Corporation. The agreement provides for a sixty-day extension on the loan agreement with Troy mining Corporation and also an extension to file the S-1 registration.
On February 16, 2021, a contract extension for
ninety (90) days was signed between Troy Mining Corporation and Star Alliance International Corporation. A payment of $
On October 21, 2021, a contract extension for
ninety (90) days was signed between Troy Mining Corporation and Star Alliance International Corporation. A payment of $
NOTE 5 – RELATED PARTY TRANSACTIONS
On January 1, 2021 the employment agreements for
Richard Carey and Anthony Anish were updated to include salaries of $
Mr. Carey is using his personal office space at no cost to the Company.
As of December 31, 2021, the Company owes Mr.
Anish $
As of December 31, 2021, the Company owes Mr.
Carey $
On January 24, 2022, the Board of Directors appointed
Mr. Weverson Correia as the Chief Executive Officer and a Director of the Company. Mr. Correia was issued shares of common stock
on December 16, 2021. The shares were valued at $ per share, the closing stock price on the date of grant, for total non-cash expense
of $
| 8 |
NOTE 6 – NOTES PAYABLE
As of December 31, 2021, and June 30, 2021, the
Company owed Kok Chee Lee, the former CEO and Director of the Company, $
On June 1, 2018, the Company executed a promissory
note in the amount of $
On June 11, 2019, the company executed a promissory
note with Troy for $
On June 26, 2020, an individual loaned the Company
$
As of December 31, 2021, the Company owes various
other individuals and entities a total of $
NOTE 7 – PREFERRED STOCK
Of the shares of the Company's authorized Preferred Stock, $ par value per share, are designated Series A preferred stock and shares are designated as Series B Preferred Stock.
Series A Preferred Stock
Each Share of Series A preferred stock shall have 500 votes per share and each share can be converted into 500 shares of common stock. The holders of the Series A preferred stock are not entitled to dividends.
On July 2, 2020, the Board granted all shares of the Series A preferred stock to the Company’s Chairman and CEO, Richard Carey, in conversion of $ of accrued compensation.
Series B Preferred Stock
Only one person or entity, is entitled to be designated as the owner of all of the Series B Preferred Stock (the “Holder”), in whose name the initial certificates representing the Series B Preferred Stock shall be issued. Any transfer of the Series B Preferred Stock to a different Holder must be approved in advance by the Corporation; provided, however, the Holder shall have the right to transfer the Series B Preferred Stock, or any portion thereof, to any affiliate of Holder or nominee of Holder, without the approval of the Corporation. Each share of Preferred Stock shall have one vote per share. Holder is not entitled to dividends or distributions and each share of Series B Preferred Stock shall be convertible at the rate of two Common Shares for each one B Preferred stock.
In conjunction with the APA with Troy, the company
issued shares of Series B Preferred Stock, the shares were valued at $0.002 or $
| 9 |
On October 9, 2019, the parties have agreed to extend the date for filing the registration statement relating to the preferred shares of the Company to be issued to the Troy shareholders and that would in turn extend the date that the shares would become free trading. This extension will be for 150 days for filing the registration statement and obtaining approval for the shares to become free trading. All the remaining terms included in the contract will remain the same.
NOTE 8 – COMMON STOCK
During the year ended June 30, 2021, the Company
granted shares of common stock for services. The shares were valued at $0.02 per share for total non-cash expense of $
During the year ended June 30, 2021, the Company
issued shares of common stock in conversion of a $
During the year ended June 30, 2021, the Company
sold shares of common stock for total cash proceeds of $
During the six months ended December 31, 2021,
the Company granted shares of common stock for services. The shares were valued at $4.50 per share, based on the value of the services
as provided by the services provider’s invoice, for total non-cash expense of $
During the six months ended December 31, 2021,
the Company granted
During the six months ended December 31, 2021,
the Company granted shares of common stock for services. The shares were valued at $1.12 per share, the closing stock price on
the date of grant, for total non-cash expense of $
During the six months ended December 31, 2021,
the Company granted shares of common stock for services. The shares were valued at $1.55 per share, the closing stock price on
the date of grant, for total non-cash expense of $
During the six months ended December 31, 2021,
the Company granted shares of common stock for services. The shares were valued at $1.55 per share, the closing stock price
on the date of grant, for total non-cash expense of $
During the six months ended December 31, 2021,
the Company granted shares of common stock for services. The shares were valued at $1.55 per share, the closing stock price on
the date of grant, for total non-cash expense of $
During the six months ended December 31, 2021,
the Company sold shares of common stock for total cash proceeds of $
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NOTE 9 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were available to be issued, and has determined that no material subsequent events exist other than the following.
On December 15, 2021, the Company signed a definitive agreement to purchase 51% of Compania Minera Metalurgica Centro Americana SA. (“Commsa”). For $1,000,000 in cash and 5,000,000 in restricted shares of common stock. In addition, the Company has agreed to provide up to $7,500,000 working capital to expand the mining operations in a gold mining project (Rio Jalan Project) in Olancho state in the highlands of Central Honduras. This transaction has become effective as of January 1, 2022.
This project, that runs along a 12.5 mile stretch of the Rio Jalan River, is a peaceful agrarian area, with only farmers and ranchers in the nearby five villages.
The environmental licenses have been obtained and exploration is ongoing. The mines are expected to be producing gold in the second quarter of 2022 and will be expanded during the year. Gold resources are estimated to be in excess of 1 million oz. This estimate came from a limited appraisal of the area in which the mines are located.
On January 4, 2022, the Company issued the 4,000,000 shares of common stock that were granted for services in Q2.
On January 10, 2022, the Company issued 1,000,000 shares of common stock to Themis Glatman, director, for services.
On January 24, 2022, the Board accepted the resignation of Mr. Richard Carey as Chief Executive Officer. Mr. Carey is resigning as CEO but remains as Chairman.
On January 24, 2022, the Board of Directors appointed Mr. Weverson Correia as the Chief Executive Officer and a Director of the Company.
Subsequent to December 31, 2021, the Company issued the 1,600,000 shares of common stock for services.
Subsequent to December 31, 2021, the Company issued 277,000 shares of common stock for conversion of $27,000 and $700 of principal and interest, respectively.
Subsequent to December 31, 2021, the Company issued 7,110,000 shares of common stock for cash. 60,000 of the shares were sold in Q2. The Company received $90,000.
Star Alliance has entered into an agreement to complete a new NI43-101 valuation report. It is anticipated that the report will be completed late in the first quarter or early in the second quarter of Fiscal 2022.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer. You should, however, consult further disclosures we make in future filings of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
BUSINESS
Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada. Our prior business plans, which generated limited or no earnings, included interior decorating products, and a travel and tourism service.
On May 14, 2018, Richard Carey our President and Chairman of the Board, acquired 22,000,000 shares of common stock of the Company, representing 62.15% ownership of the Company which constitutes control. Mr. Carey accepted the positions of President and Chairman of the Board on the same day.
Current officers and directors are as follows:
| Richard Carey | Chairman, Board Member (resigned as CEO on January 24, 2022) |
| Weverson Correia | Appointed CEO on January 24, 2022, Board member |
| James Baughman | President Operations |
| Alexei Tchernov | Executive Vice President Finance, Board Member |
| Franz Allmayer | Vice President Finance, Board Member |
| Themis Glatman | Treasurer, Board Member |
| Anthony Anish | Company Secretary, Interim CFO, Board Member |
| Fernando Godina | Vice President, Board Member |
| 12 |
On October 25, 2018, Star entered into a Letter of Intent (the “LOI”) with Troy Mining Corporation, a Nevada corporation (“Troy”) and its two majority shareholders and on March 25, 2019 and on August 5th this LOI was extended. Troy is the owner of 78 gold mining claims consisting of approximately 4800 acres, located east/southeast of El Portal, California, in Mariposa County. Troy also owns a production processing mill together with related equipment and buildings. On August 13, 2019, the Company closed the transaction making the first payment on the acquisition of all the assets of Troy Mining Corporation. Further payments have been made since that date and the Company is current on all its obligations.
The Company’s business focus will be the pursuit of mining and mining technology businesses. The Company acquired the assets of Troy Mining Corporation, its first mining assets, on August 13, 2019.
On November 22, 2021, STAL entered into a binding Letter of Intent to acquire 49% of Lions Works Advertising, SA, a Guatamala Corporation that owns the “Genesis” ore extraction process. Since the letter of Intent was signed STAR has renegotiated and STAR is now acquiring a controlling interest of 51% of the Company. The purchase requires STAL to invest up to $3 million to be used to grow the business, building a number of Genesis plants that can be placed in customer mining sites including our own Troy mining site. The green, environmentally friendly process, extracts up to 98% of the gold ore from the rock.
Results of Operations for the Three Months Ended December 31, 2021 as Compared to the Three Months Ended December 31, 2020
Operating expenses
General and administrative expenses (“G&A”) were $1,039,338 for the three months ended December 31, 2021, compared to $13,906 for the three months ended December 31, 2020, an increase of $1,025,432. In the current period we recognized $255,000 of non-cash expense for stock issued for investor relation services and we recognized $772,500 of non-cash expense for stock issued for mine development services.
Professional fees were $11,020 for the three months ended December 31, 2021, compared to $2,500 for the three months ended December 31, 2020, an increase of $8,520. Professional fees consist mainly of legal, accounting and audit expense. The increase in the current period is due to an increase in audit fees.
Consulting fees were $188,362 for the three months ended December 31, 2021, compared to $5,000 for the three months ended December 31, 2020. In the current period we issued shares of common stock for $188,362 on non-cash consulting expense.
Director compensation was $30,000 and $15,000 for the three months ended December 31, 2021 and 2020, respectively. Monthly compensation to our director was increased in January 2021.
Officer compensation for our CEO was $45,000 and $30,000 for the three months ended December 31, 2021 and 2020, respectively. Monthly compensation to our CEO was increased in January 2021.
Other income (expense)
For the three months ended December 31, 2021 and 2020, we had interest expense of $1,182 and $882, respectively.
Net Loss
Net loss for the three months ended December 31, 2021 was $1,316,402 compared to $68,288 for the three months ended December 31, 2020. The large increase in our net loss is due to non-cash stock compensation expense.
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Results of Operations for the Six Months Ended December 31, 2021 as Compared to the Six Months Ended December 31, 2020
Operating expenses
General and administrative expenses (“G&A”) were $1,048,400 for the six months ended December 31, 2021, compared to $42,799 for the six months ended December 31, 2020, an increase of $1,005,601. In the current period we recognized $258,334 of non-cash expense for stock issued for investor relation services and we recognized $772,500 of non-cash expense for stock issued for mine development services.
Professional fees were $13,020 for the six months ended December 31, 2021, compared to $28,190 for the six months ended December 31, 2020, a decrease of $15,170. Professional fees consist mainly of legal, accounting and audit expense. The decrease in the current period is due to a decrease in audit and legal fees.
Consulting fees were $188,362 for the six months ended December 31, 2021, compared to $33,350 for the six months ended December 31, 2020. In the current period we issued shares of common stock for $188,362 on non-cash consulting expense. In the prior period we issued shares of common stock for $30,000 on non-cash consulting expense.
Director compensation was $60,000 and $30,000 for the six months ended December 31, 2021 and 2020, respectively. Monthly compensation to our director was increased in January 2021.
Officer compensation for our CEO was $90,000 and $65,000 for the six months ended December 31, 2021 and 2020, respectively. Monthly compensation to our CEO was increased in January 2021.
Other income (expense)
For the six months ended December 31, 2021 and 2020, we had interest expense of $2,064 and $9,036, respectively. In the prior period we also had $46,200 loss on the conversion of accrued salary and a $3,870 gain on the forgiveness of debt.
Net Loss
Net loss for the six months ended December 31, 2021 was $1,404,846 compared to $254,705 for the six months ended December 31, 2020. The large increase in our net loss is due to non-cash stock compensation expense.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has an accumulated deficit of $4,577,637. For the six months ended December 31, 2021 the Company had a net loss of $1,404,846 with $40,046 of cash used in operating activities. Due to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern.
Net cash used in operating activities was $40,046 during the six months ended December 31, 2021 compared to $129,263 in the prior period.
Net cash provided by financing activities was $43,550 and $111,302 for the six months ended December 31, 2021 and 2020, respectively. In the current period we received $39,000 from the sale of common stock and $4,550 from a cash advance from a director. In the prior period we received $121,500 from loans, $42,500 from the sale of common stock and $23,582 from loans from our CEO. This was offset by $18,280 paid back to our CEO and $58,000 paid on other loans.
Over the next twelve months, we expect our principal source of liquidity will be dependent on borrowings from related parties.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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 accounting principles generally accepted 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 or Plan of Operation where such policies affect our reported and expected financial results. 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. There can be no assurance that actual results will not differ from those estimates.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
This item is not applicable as we are currently considered a smaller reporting company.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (SEC) rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Disclosure Controls
In designing and evaluating the Company's disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, Company management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Evaluation of Disclosure Controls and Procedures
Our CEO and CFO, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on the evaluation, they have concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures were not effective as of December 31, 2021 due to the material weaknesses as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC.
Changes in Internal Control over Financial Reporting
Such officers also confirmed that there was no change in our internal control over financial reporting during the six months ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of their property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
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Item 6. Exhibits.
| Incorporated by reference | |||||||||||||
| Exhibit | Exhibit Description | Filed herewith |
Form | Period ending |
Exhibit | Filing date |
|||||||
| 31.1 | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | X | |||||||||||
| 31.2 | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | X | |||||||||||
| 32.1 | Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act | X | |||||||||||
| 32.2 | Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act | X | |||||||||||
| 101.INS | Inline XBRL Instance Document | ||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||
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SIGNATURES
Pursuant to the requirements 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.
| Date: February 17, 2022 | By: | /s/ Richard Carey | |
| Richard Carey | |||
| Chairman | |||
| By: | /s/ Anthony L. Anish | ||
| Date: February 17, 2022 | Anthony L. Anish | ||
| Interim Chief Financial Officer | |||
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