UNITED STATES
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 10-K
___________
(MARK ONE)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 20202022
or
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 333-170315
AngioSoma, Inc.
(Exact name of registrant as specified in its charter)
Wyoming | 27-3480481 | |
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification Number) | |
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| |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: 832-781-8521206-451-1970
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class | Name of Each Exchange on which Registered | |
Common stock, $0.001 par value | OTC Markets |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark if disclosures of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |
(Do not check is smaller reporting company) | Emerging growth company | ☒ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, March 31, 20202022 was $409,587.$3,963,984.
There were 445,493,342 shares of the Registrant’s common stock outstanding as of December 2, 2020.January 3, 2023.
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ANGIOSOMA, INC.
GLOBESTAR THERAPEUTICS CORPORATION.
TABLE OF CONTENTS
| Part I | 5 |
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5 | |
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10 | |
10 | |
10 | |
10 | |
Part II | 11 |
11 | |
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of operations |
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk |
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17 | |
18 | |
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Consolidated Statements of |
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23 | |
24 | |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Part III |
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Item 10. Directors, Executive Officers and Corporate Governance |
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Item 13. Certain Relationships and Related Transactions, and Director Independence |
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Part IV |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
OTHER PERTINENT INFORMATION
When used in this report, the terms, “we,” the “Company,” “SOAN,“GSTC,” “our,” and “us” refers to AngioSoma, Inc.GlobeStar Therapeutics Corporation., a NevadaWyoming corporation.
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PART I
ITEM 1. BUSINESS
Overview
AngioSomaGlobeStar Therapeutics Corporation (the “Company”) was incorporated on April 29, 2016. The Company’s year-end is September 30. On October 4, 2019, the Company filed Articles of Continuance with the Secretary of State of Wyoming to continue its business in the state of Wyoming. As part of these Articles of Continuance, effective October 4, 2019, the Company has no limit on the authorized shares of common stock that can be issued. The Company filed its Certificate of Dissolution with the Secretary of State of Nevada on October 21, 2019 because it is no longer a Nevada corporation.
We changed our name to GlobeStar Therapeutics Corporation on April 27, 2021 to better reflect our expanded platform of products that include breakthrough addition of treatment for Multiple Sclerosis and other neurodegenerative diseases.
GlobeStar Therapeutics Corporation, based in Richland Washington, is a clinical stage Pharmaceutical Company introducing a patented formulation of previously approved drugs for the treatment of Multiple Sclerosis. GlobeStar Therapeutics owns the exclusive global license from the inventors, who are based in Italy. GlobeStar Therapeutics is initiating discussions with the FDA on clinical trial design in preparation for FDA submission and approval pathway.
Prior to the Company’s current business plan, the Company was a wellness company dedicated to bringing innovative, effective and high-quality supplement products to the medical, wellness and adult-use markets through our marketing subsidiary, SomaCeuticalsTM. SomaCeuticals has acquired a diversified supply of supplements, strong clinical, scientific and operating capabilities and leading product research and development infrastructure in order to create trusted products and brands in an expanding global market.
Professional Team
We have abandoned our pursuitadopted a Medical Advisory Board and appointed medical doctors and medical professionals that have extensive education and hands on experience with pharmaceutical and nutraceutical solution for prevention and treatment of FDA clearancedisease.
Management’s Plan to Attract Capital
In the near term, management will utilize debt or preferred stock financing to complete assembling the professional and marketing of any drugs or products, including LiprostinTM,management team to commence the patented pharmaceuticalprocess for a controlled drug delivery system. When rights to the drug were acquired it was represented that the initial clinical trials had been successfully completed andin compliance with FDA protocol. plans to continue to focus on raising the single remaining trial was eligiblefunds necessary to go forward. Research disclosedimplement the representations are untrue. Therefore, further effortsCompany’s business plan. Management will continue to seek clearance and marketout debt financing to obtain the product ceased.
Effective August 23, 2020capital required to meet the issuer’s subsidiary, SomaCeuticals, Inc. entered into an exclusive global license agreement with 7 to Stand, Inc. for the rights to U.S. patent 10,610,592 issued to Fabrizio de Silvestri, Terni, Italy, as inventor, April 7, 2020 for treatment of Multiple Sclerosis(MS). On August 12, 2020 James C. Katzaroff was elected President of the subsidiary and authorized to clear the patented pharmaceutical with FDA and oversee international marketing.
Multiple Sclerosis (MS) is a chronic disease in which the immune system of the individual attacks the central nervous system and affects the nerve cells. The disease can manifest with a wide range of neurological symptoms and can progress to total physical and cognitive disability. There are many different symptoms of MS, including fatigue, numbness, walking and balance problems, bladder dysfunction, bowel dysfunction, vision problems, dizziness and vertigo, sexual dysfunction, pain, cognitive dysfunction, emotional changes, depression and spasticity.
Company’s financial obligations. There is no known cure using current treatmentsassurance, however, that investors will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and is the most common immune-mediated disorder affectingpotential inability to achieve profitability raise doubts about the central nervous system. With over 2.3 million people affectedCompany’s ability to continue as a going concern.
In the midterm, management will enhance its capital position with a public offering of equity securities to finance clinical trials and with each individual spending approximately $70,000 per year,the necessary actions to obtain approval of worldwide marketing of our MS ranked eighth by drug invoice spending amongtreatment
In the top therapeutic classes inlong term, marketing the U.S. in 2016, representing nearly $19 billion in drug spending alone.Company’s pharmaceutical and nutraceutical products will provide the necessary cash flow to support future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of capital to support near term and midterm business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to support its operations.
Corporate Governance
We have adopted codes and committees for governance of the corporation that include: (i) audit committee charter, (ii) written acknowledgement of code of ethics for directors and senior officers, (iii) compensation committee charter, (iv) confidential information policy, iv) corporate governance guidelines, (vi) executive committee charter, and (vii) nominating committee charter.
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ITEM 1A. RISK FACTORS
You should carefully consider the following risk factors discussed below and the matters addressed under “Special Note Regarding Forward-Looking Statements,” together with all the other information presented in this prospectus, including our audited financial statements and related notes. The risks described below are the only presently known risks facing us or that may materially adversely affect our business. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business. If any of the following risks develop into actual events, our business, financial condition or results of operations could be materially adversely affected and you may lose all or part of your investment.
We face substantial competition, which may result in others developing or commercializing products before or more successfully than we do.
The development and commercialization of our dietary supplements is highly competitive. We expect that we will face significant competition from other companies that develop and market dietary supplements.
Many of our existing and potential future competitors have significantly greater financial resources and expertise in research and development, manufacturing, and marketing dietary supplements than we do.
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Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit marketing of our supplements.
We face an inherent risk of product liability claims. For example, we may be sued if any product we sell allegedly causes injury or is found to be otherwise unsuitable. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products. Regardless of the merits or eventual outcome, liability claims may result in:
| decreased demand for our products or products that we may develop; |
| injury to our reputation and significant negative media attention; |
| significant costs to defend resulting litigation; |
| substantial monetary awards to users; |
| loss of revenue; |
| reduced resources of our management to pursue our business strategy; and |
| the inability to commercialize our products and additional products that we may develop. |
Risks Related to Our Financial Position and Need for Additional Capital
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion of revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. In particular, in this 10-K, we have provided only two years of audited consolidated financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.
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We have a history of operating losses and expect to continue to realize losses in the near future. Currently our operations are producing inadequate revenue to fund all operating costs, and we rely on investments by third parties to fund our business. Even as our revenue grows, we may not become profitable or be able to sustain profitability.
From inception, we have incurred significant net losses and have not realized adequate revenue to support our operations. We expect to continue to incur net losses and negative cash flow from operations in the near future, and we will continue to experience losses for at least as long as it takes our company to generate revenue from the sale of products. The size of these losses will depend, in large part, on whether we develop products in a profitable manner. To date, we have had only limited operating revenues. There can be no assurance that we will achieve material revenues in the future. Should we achieve a level of revenues that make us profitable, there is no assurance that we can maintain or increase profitability levels in the future.
There is substantial doubt as to whether we will continue operations. If we discontinue operations, you could lose your investment.
The following factors raise substantial doubt regarding the ability of our business to continue as a going concern: (i) the losses we incurred since our inception; (ii) our lack of significant operating revenues since inception through the date of this prospectus; and (iii) our dependence on debt and equity funding to continue in operation. We therefore expect to incur significant losses in the foreseeable future. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to curtail or cease our operations. If this happens, you could lose all or part of your investment.
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Our lack of any profitable operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.
We do not have any substantial operating history, which makes it impossible to evaluate our business on the basis of historical operations. Our business carries both known and unknown risks. As a consequence, our past results may not be indicative of future results. Although this is true for any business, it is particularly true for us because of our lacking any profitable operating history.
Because our auditors have issued a going concern opinion, there is substantial uncertainty that we will be able to continue our operations.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue to operate over the next 12 months. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence. As such, if we are unable to obtain new financing to execute our business plan we may be required to cease our operations.
We recently added toEffective March 3, 2021, we changed management August 12, 2020 by electing James C. Katzaroff president of our subsidiary, SomaSouticals, Inc.President and Chief Executive Officer.
There is no assurance Mr. Katzaroff will be successful in securing FDA clearance and marking the newly acquiresacquired license for treatment of Muscular DystrophyMultiple Sclerosis.
One of our stockholdersOur chief executive officer has the ability to significantly influence any matters to be decided by the stockholders, which may prevent or delay a change in control of our company.
Alex Blankenship,James Katzaroff, our CEO, currently owns 1,000,000 shares of series E preferred stock. The owner of the series E preferred stock is entitled to the number of votes equal to double the number of votes of all other stockholders. Therefore, Ms. BlankenshipMr. Katzaroff has voting rights equal to two-thirds of all votes cast at any action of stockholders and can exert decisive influence over the outcome of any corporate matter submitted to our stockholders for approval, including the election of directors, removal of the entire board of directors and any transaction that might cause a change in control, such as a merger or acquisition. Any stockholders in favor of a matter that is opposed by this stockholder cannot overrule the vote of Alex Blankenship.James Katzaroff.
Alex BlankenshipJames Katzaroff is our sole directorone of three directors and CEO. The loss of Ms. BlankenshipMr. Katzaroff could adversely affect our business.
Since Ms. BlankenshipMr. Katzaroff is currently our onlya director and CEO, if shehe were to die, become disabled, or leave our company, we would be forced to retain an individual to replace her.him. There is no assurance that we can find a suitable person to replace herhim if that becomes necessary. We have no “key man” life insurance at this time.
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Our chief executive officer, Alex Blankenship, became responsible for the operations and reporting of our company June 3, 2016. The requirements of operating as a small public company are new to Ms. Blankenship. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could cost more than forecast. We may also be required to hire additional staff to comply with additional SEC reporting requirements.
Risks related to our common stock
We lack an established trading market for our common stock, and you may be unable to sell your common stock at attractive prices or at all.
There is currently a limited trading market for our common stock on the OTC Market Group’s PinkQB tier under the symbol “SOAN.“GSTC.” There can be no assurances given that an established public market will be obtained for our common stock or that any public market will last. As a result, we cannot assure you that you will be able to sell your common stock at attractive prices or at all.
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The market price for our common stock may be highly volatile.
The market price for our common stock may be highly volatile. A variety of factors may have a significant impact on the market price of our common stock, including:
| the publication of earnings estimates or other research reports and speculation in the press or investment community; |
| changes in the |
| our financial condition, results of operations and prospects; |
| any future issuances of our common stock, which may include primary offerings for cash, and the grant or exercise of stock options from time to time; |
| general market and economic conditions; and |
| any outbreak or escalation of hostilities, which could cause a recession or downturn in our economy. |
We may be subject to shareholder litigation, thereby diverting our resources that may have a material effect on our profitability and results of operations.
As discussed in the preceding risk factors, the market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may become the target of similar litigation. Securities litigation will result in substantial costs and liabilities and will divert management’s attention and resources.
Future sales of common stock by stockholders may have an adverse effect on the then prevailing market price of our common stock.
In the event a public market for our common stock is sustained in the future, sales of our common stock may be made by holders of our public float or by holders of restricted securities in compliance with the provisions of Rule 144 of the Securities Act of 1933. In general, under Rule 144, a non-affiliated person who has satisfied a six-month holding period in a company registered under the Securities Exchange Act of 1934, as amended, may, sell their restricted common stock without volume limitation, so long as the issuer is current with all reports under the Exchange Act in order for there to be adequate common public information. Affiliated persons may also sell their common shares held for at least six months, but affiliated persons will be required to meet certain other requirements, including manner of sale, notice requirements and volume limitations. Non-affiliated persons who hold their common shares for at least one year will be able to sell their common stock without the need for there to be current public information in the hands of the public. Future sales of shares of our public float or by restricted common stock made in compliance with Rule 144 may have an adverse effect on the then prevailing market price, if any, of our common stock.
We do not expect to pay cash dividends in the foreseeable future.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Even if funds are legally available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends. The declaration, payment and amount of any future dividends will be made at the discretion of our board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board of directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.
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As a public company, we are subject to complex legal and accounting requirements that will require us to incur significant expenses and will expose us to risk of non-compliance.
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As a public company, we are subject to numerous legal and accounting requirements that do not apply to private companies. The cost of compliance with many of these requirements is material, not only in absolute terms but, more importantly, in relation to the overall scope of the operations of a small company. Our relative inexperience with these requirements may increase the cost of compliance and may also increase the risk that we will fail to comply. Failure to comply with these requirements can have numerous adverse consequences including, but not limited to, our inability to file required periodic reports on a timely basis, loss of market confidence and/or governmental or private actions against us. We cannot assure you that we will be able to comply with all of these requirements or that the cost of such compliance will not prove to be a substantial competitive disadvantage vis-à-vis our privately held and larger public competitors.
Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for our management.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations promulgated thereunder, the Sarbanes-Oxley Act and SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the U.S. public markets. Our management team will need to devote significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms.
When we elect to raise additional funds or additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives Additional equity or debt financing or corporate collaboration and licensing arrangements may not be available on acceptable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing acquisition, licensing, development and commercialization efforts and our ability to generate revenues and achieve or sustain profitability will be substantially harmed.
If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences, which are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely affected and we may be unable to continue our operations.
We are subject to penny stock regulations and restrictions, and you may have difficulty selling shares of our common stock.
Our common stock is subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934 (the “Exchange Act”), commonly referred to as the “penny stock rule.” Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. We are subject to the SEC’s penny stock rules.
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Since our common stock is deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice requirements on broker-dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited investors” are persons with assets in excess of $1,000,000 (excluding the value of such person’s primary residence) or annual income exceeding $200,000 or $300,000 together with their spouse. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such security and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt the rules require the delivery, prior to the first transaction of a risk disclosure document, prepared by the SEC, relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks held in
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an account and information to the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealer to trade and/or maintain a market in our common stock and may affect the ability of our stockholders to sell their shares of common stock.
There can be no assurance that our shares of common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock was exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.
Our common stock is subject to price volatility unrelated to our operations.
The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or ourselves. In addition, the over-the-counter market is subject to extreme price and volume fluctuations in general. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
Trading in our common stock on the OTC Markets is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments.
Trading in our common stock is currently published on the OTC Markets. The trading price of our common stock has been subject to wide fluctuations. Trading prices of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.
ITEM 1B. UNRESOLVED STAFF COMMENTS
This item is not applicable to emerging growth companies.
ITEM 2. PROPERTIES
We maintain our corporate offices at 2500 Wilcrest Drive, 3rd Floor, Houston, Texas 77042.719 Jadwin Avenue, Richland, WA Our telephone number is 832-781-8521.206-451-1970.
ITEM 3. LEGAL PROCEEDINGS
As of September 30, 2019, the Company was involved in litigation: Cause No. 2018-48120; Somaceuticals, Inc. and AngioSoma, Inc. v. David Summers in the 151st District Court of Harris County, Texas. Dr. Summers provided scientific expertise to AngioSoma for a number of years, and there was a dispute regarding the ownership of several patents and other intellectual property. AngioSoma obtained a favorable settlement of the lawsuit on October 16, 2019, which resulted in the settlement of all claims of both parties along with (i) the assignment by the Company of certain technology and intellectual property to Dr. Summers, (ii) the assignment by Dr. Summers of any interest he owns in certain technology and intellectual property to the Company; and (iii) the assignment by Summers of 5,800,000 shares of Series A preferred stock of the Company to the Company.
We know of no other material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock trades onover the “Overcounter and trading is reported by OTC Markets under the Counter” Bulletin Board’s Pink Tier (“OTC”)QB tier under the symbol “SOAN”“GSTC”. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile.
Holders
As of the date of this filing, there were 2742 holders of record of our common stock.
Dividends
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
Common Stock
We are authorized to issue an unlimited number shares of common stock, with a par value of $0.001. The closing price of our common stock on December 2, 2020,January 3, 2023, as quoted by OTC Markets Group, Inc., was $0.0082.$0.0125. There were 445,493,342770,360,616 shares of common stock issued and outstanding as of December 2, 2020.January 3, 2023. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
Our Articles of Incorporation, our Bylaws, and the applicable statutes of the state of NevadaWyoming contain a more complete description of the rights and liabilities of holders of our securities.
During the year ended September 30, 2020,2022, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.
Non-cumulative voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
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Securities Authorized for Issuance under Equity Compensation Plans
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of September 30, 2020.2022.
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Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance | ||||||||||
Equity compensation plans approved by security holders. | — |
| — |
| 10,000,000 | ||||||||
Equity compensation plans not approved by security holders. | — |
| — |
| — | ||||||||
Total | — |
| — |
| 10,000,000 | ||||||||
Preferred Stock
Our authorizedauthority to issue preferred stock consists of 20,000,000is unlimited shares of $0.001 par value preferred stock.
Series A Preferred Stock – Our board of directors has designated up to 6,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock has a liquidation value of $2.00 per share. The initial number issued is 5,000,000 with additional shares to be issued as a dividend not to exceed a total of 6,000,000 shares. The rank of the Series A is prior to all common and preferred shares. In addition, the Series A Preferred Stock retains protective provisions to maintain their seniority with respect to liquidation or dissolution. The Series A Preferred Stock holds no voting rights and earns an 8% per annum dividend, payable in additional shares of Series A Preferred Stock. As part of a legal settlement with David Summers, during the year ended September 30, 2020, 5,800,000 shares of Series A Preferred Stock were returned to the Company and cancelled. At September 30, 2020,2022 and 2021, no shares of the Series A Preferred Stock were issued and outstanding.
Series B Preferred Stock – Our board of directors has designated up to 1,000,000 shares of Series B Preferred Stock. The Series B Preferred Stock has a liquidation value of $1.00 per share. The holders of the Series B Preferred Stock are entitled to dividends of 8% per year payable quarterly in cash or in shares of common stock at the option of the Company. The holders of the Series B Preferred Stock have no voting rights. The Series B Preferred Stock is redeemable at the option of the Company at a price of $1.00 per share. At September 30, 2020,2022 and 2021, no shares of Series B Preferred Stock were issued or outstanding.
Series C Preferred Stock – On September 12, 2017, our board of directors designated up to 1,200,000 shares of Series C Preferred Stock with a liquidation value of $0.50 per share. The holders of the Series C Preferred Stock have no voting rights. The Series C Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of one share of common stock for each share of Series C Preferred Stock. The Series C Preferred Stock is redeemable at the option of the Company at a price of $0.50 per share. The Series C Preferred Stock has been canceled as of September 30, 2017.
Series D Preferred Stock – On September 21, 2017, our board of directors designated up to 539,988 shares of Series D Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series D Preferred Stock have no voting rights. The Series D Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $0.01 per share of common stock. The Series D Preferred Stock is not redeemable. At September 30, 2020,2022 and 2021, 509,988 shares of the Series D Preferred Stock were issued and outstanding.
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Series E Preferred Stock – Our board of directors has designated up to 1,000,000 shares of Series E Preferred stock. The Series E Preferred stock has voting rights on the basis of two votes for every outstanding share of common stock meaning that the holders of the Series E Preferred Stock have 2/3 of the voting rights in the Company. At September 30, 2020,2022 and 2021, 1,000,000 shares of the Series E Preferred Stock were issued and outstanding.
Series F Preferred Stock – On September 21, 2017, our board of directors designated up to 501,975 shares of Series F Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series F Preferred Stock have no voting rights. The Series F Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $0.01 per share of common stock. The Series F Preferred Stock is not redeemable. During the year ended September 30, 2019, 60,000 shares of the Series F Preferred Stock were returned for cancellation. At September 30, 2020,2021, 386,975 shares of the Series F Preferred Stock were issued and outstanding. During the year ended September 30, 2022, 257,984 shares of Series F Preferred Stock was converted into 25,798,400 shares of common stock. At September 30, 2022, 128,991 shares of the Series F Preferred Stock were issued and outstanding.
Series G Preferred Stock- 12On August 11, 2021, our board of directors designated up to 1,000,000 shares of Series G Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series G Preferred Stock have no voting rights except on matters related specifically to the Series G Preferred Stock. The Series G Preferred Stock carries a dividend of 8% of the stated value per share, which is cumulative and payable upon redemption, liquidation or conversion, and increases to 22% in case of default. The Series G Preferred Stock and accrued dividends are convertible beginning 180 days from issuance at the option of the holder into shares of common stock at a rate of a conversion price of 75% of the average three lowest trading prices during the 15 days prior to conversion. The Company will be required to redeem the Series G Preferred Stock upon the earlier of 15 months from issuance date or upon on event of default as defined in the agreement. The Company sold 93,500 shares for net cash proceeds of $81,250 of cash proceeds.
Based on the economic characteristics of the Series G Preferred Stock, the Company determined that the Series G should be accounted for as a liability under ASC 480-10, based on the discounted conversion price providing an effectively fixed monetary amount that the preferred stock is convertible into. The Company recorded a debt discount of $25,000 for the difference between the cash proceeds and the total amount to be redeemed by the holder of $106,250. The Company amortized $2,425 of this discount through September 30, 2021. The dividends on the Series G Preferred Stock are recorded as interest expense and totaled $1,164 through September 30, 2021.
During the year ended September 30, 2022, the Company sold an aggregate of 369,875 shares of Series G Preferred Stock for net cash proceeds of $310,000. The Company recorded a debt discount of $59,875 for the difference between the cash proceeds and the total amount to be redeemed by the holder of $369,875. The Company amortized $54,664 of discount related to Series G Preferred Stock for the year months ended September 30, 2022. The dividends on the Series G Preferred Stock are accrued as interest. The Company recognized $15,852 of interest on the Series G Preferred Stock and had an accrued interest balance of $3,983 and $1,281 as of September 30, 2022 and September 30, 2021, respectively. During the year ended September 30, 2022, the holder of the Series G converted 324,500 shares of Series G into 109,052,543 shares of common stock, and the Company recognized a loss of $5,939.
As of September 30, 2022 and September 30, 2021, 138,875 and 93,500 shares of the Series G Preferred Stock were issued and outstanding, respectively.
- 13 -
Recent Sales of Unregistered Securities
Set forth below is information regarding securities sold by during the quarter ended September 30, 20202022 that were not registered under the Securities Act:
Date of Sale | Title of Security | Number Sold | Consideration Received | Exemption from | If Option, Warrant | |||||
| Common Stock |
| Conversion of | Section 3(a)(9) of the Securities Act | Convertible at | |||||
| Common Stock |
| Conversion of | Section 3(a)(9) of the Securities Act | N/A | |||||
| August 23, 2022 | Common Stock | 8,139,130 | Conversion of 18,000 Shares of Series G Preferred Stock | Section 3(a)(9) of the Securities Act | Convertible at | |||||
| Common Stock |
| Conversion of | Section 3(a)(9) of the Securities Act | Convertible at | |||||
| Common Stock |
| Services rendered | Section 3(a)(9) of the Securities Act | N/A | |||||
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ITEM 6. SELECTED FINANCIAL DATA
This item is not applicable to emerging growth companies.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives, and performance that involve risk, uncertainties, and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
Plan of Operations
We believe we do not have adequate funds to fully execute our business plan for the next twelve months unless we obtain additional funding. However, should we not raise this capital, we will allocate our funding to first assure that all State, Federal and SEC requirements are met.
Results of Operations
Revenue
Revenue forFor the yearyears ended September 30, 2020 was $77 compared to revenue of $425 during2022 and 2021 the year ended September 30, 2019.Company had no revenue.
Cost of Goods Sold
Cost of goods sold was $37,682$0 during the year ended September 30, 2020,2022, compared to $154$2,412 during the prior year. Cost of sales increaseddecreased primarily due to the write down of slow-moving and expired inventory during the current year of $37,667.$2,412 during the year ended September 30, 2021.
Sales, General, and Administrative Expenses
We incurred sales, general and administrative expenses of $266,066$1,265,065 during the year ended September 30, 20202022 compared to $316,141$9,091,817 during the year ended September 30, 2019,2021, a decrease of $50,075$7,826,752 or approximately 16%86%. The decrease in general and administrative expense was duerelated primarily to a decrease in non-cashstock-based compensation of $32,750, a decrease in legal fees of $9,445 and a decrease in website related costs of $15,312, partially offset by an increase in accounting fees of $11,527.
Gain on Forgiveness of Debt
We recognized a gain on the forgiveness of debt in the amount of $110,834$8,130,997 during the year ended September 30, 2019 with no such gain2021, compared to $509,192 during the year ended September 30, 2020..2022.
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Loss on ConversionSettlement of Debt
We recognized loss on the conversion of debt in the amount of $99,000 for the year ended September 30, 2019, with no such loss during the year ended September 30, 2020.
Loss on Marketable SecuritiesLiabilities
We recognized a loss on marketable securitiessettlement of liabilities in the amount of $10,673$146,460 during the year ended September 30, 2019. During2022 compared to $419,990 during the year ended September 30, 2019,2021. The loss in the prior period was related to the severance agreement with Alex Blankenship, our former CEO, resulting in a $419,900 loss. The Company wrote off its investment in AFS Securities, asalso recognized a loss of $5,939 on conversion of the Company believes that our investment in AFS Securities is no longer recoverable.preferred stock liability during the year ended September 30, 2022.
- 15 -
Interest Expense
We recognized interest expense in the amount of $238,060$70,346 for the year ended September 30, 2020,2022, a decrease of $122,303$217,153 or approximately 34%65% compared to $360,363$287,499 for the year ended September 30, 2019.2021. The decrease was due primarily to a decreasethe amortization of discount related to Series G Preferred stock liability during the current period in the amount of discount on$54,664 compared to $274,803 of amortization related to convertible notenotes payable amortized to interest expense.during the comparable period of the prior year.
Net Loss
For the reasons above, our net loss for the year ended September 30, 20202022 was $541,731$1,487,810 a decrease of $133,341$8,313,818 or approximately 20%86% compared to a net loss of $675,072$9,801,628 for the year ended September 30, 2019.
Other Comprehensive Income (Loss)
The Company had other comprehensive loss of $0 for the year ended September 30, 2020, compared to other comprehensive income of ($971) for the year ended September 30, 2019. Other comprehensive income (loss) consists of the change in market value of the stock of our investment in AFS Securities.
Dividends on Preferred Stock
The Company paid dividends on its Series A Preferred Stock in the amount of 800,000 shares with a liquidation value of $1,600,000 during the year ended September 30, 2019. In October 2019, a legal settlement with the holder of the Series A Preferred stock was reached, resulting in cancellation of all outstanding shares of Series A Preferred Stock.2021.
Liquidity and Capital Resources
At September 30, 2020,2022, we had cash of $81,442$6,365 and a working capital deficit in the amount of $660,497.$1,194,560. During the year ended September 30, 2020,2022, we had cash used in operating activities of $239,735,$326,995, consisting of our net loss of $541,731,$1,487,810, partially offset by non-cash compensation of $35,500, depreciation$509,192, loss on settlement of $1,329, inventory impairmentliabilities of $37,667$146,460, and amortization of discount on notes payable of $225,282.$54,664. Our cash position also increased by a net change in the components of working capital in the amount of $2,218$725,821 during the period. We have an accumulated deficit at September 30, 20202022 in the amount of $7,215,338.$18,504,776. We generated cash flows from financing activities in the amount of $222,000$28,900 from the issuance of convertible notes payablerelated party advances and $500$310,000 from the sale of common stock, to our CEO.which were offset by the repayment of related party advances of $16,500.
We had no material commitments for capital expenditures or inventory purchases as of September 30, 2020.2022. However, should we execute our business plan as anticipated, we will incur substantial capital expenditures and require financing in addition to what is required to fund our present operation.
We intend to pursue capital through public or private financing, as well as borrowing and other sources in order to finance our business activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.
- 15 -
Additional Financing
Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.
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 and Estimates
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the financial statements are prepared; actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies, which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.
Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
- 16 -
Going concern - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended September 30, 2020,2022, the Company had a net loss of $541,731$1,487,810 and generated negative cash flow from operating activities in the amount of $239,735.$326,995. In view of these matters, there is substantial doubt regarding the Company’s ability to continue as a going concern, which is dependent upon its ability to achieve a level of profitability or to obtain additional capital to finance its operations. The Company intends on financing its future activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
New Accounting Pronouncements
For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 3: Significant Accounting Polices: Recently Issued Accounting Pronouncements” in Part II, Item 8 of this Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable to smaller reporting companies.
- 16 -
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AngioSoma, Inc.GlobeStar Therapeutics Corporation
Consolidated Financial Statements
September 30, 20202022
Contents
Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738) | 18 |
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Consolidated Statements of |
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23 | |
24 |
- 17 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of AngioSoma, Inc.GlobeStar Therapeutics Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheetssheet of AngioSoma, Inc. and subsidiariesGlobeStar Therapeutics Corporation (the Company) as of September 30, 20202022 and 20192021, and the related consolidated statements of operations, statements of other comprehensive income (loss), stockholders’ deficit, and cash flows for each of the years in the two- year period ended September 30, 2020 and 2019,2022, and the related notes (collectively referred to as the “financial statements”)financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 20202022 and 2019,2021, and the results of its consolidated operations and its cash flows for each of the years in the two- year period ended September 30, 2020 and 2019,2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility isThe Company's Ability to express an opinion on the Company’s financial statements based on our audits. We areContinue as 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
Going Concern
The accompanying financial statementsstates have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.uncertainty
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit, 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 audit 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 audit 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 audit provides 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 financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Black Scholes Calculations
As discussed in Note 6 to the Financial Statements, the Company utilizes Black Scholes calculations to determine fair value of the Company’s stock compensation.
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Auditing management’s calculations of fair value of stock options involves significant judgements and estimates to determine the proper value. Volatility and term are the major assumptions used by management in determining the value of the stock options.
To evaluate the appropriateness of fair value calculation, we evaluated management’s significant judgements and estimates in what inputs were utilized within the Black Scholes calculations.
/s/ M&K CPAS, PLLC
www.mkacpas.com
We have served as the Company’s auditor since 2012.
Houston, Texas
December 3, 2020January 9, 2023
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ANGIOSOMA INC.GLOBESTAR THERAPEUTICS CORPORATION
CONSOLIDATED BALANCE SHEETS
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| September 30, |
| September 30, |
| September 30, | September 30, | ||||||||
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| 2020 |
| 2019 |
| 2022 | 2021 | ||||||||
CURRENT ASSETS |
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Cash and cash equivalents |
| $ | 81,442 |
| $ | 100,459 |
| $ | 6,365 | $ | 5,960 | ||||
Prepaid expenses |
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| 4,783 |
| 787 |
| 3,550 | — | |||||||
Inventory, net |
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| 2,412 |
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| 40,115 |
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Total current assets |
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| 88,637 |
| 141,361 |
| 9,915 | 5,960 | |||||||
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Fixed assets, net of accumulated depreciation of $1,919 and $1,496, respectively |
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| 1,275 |
| 822 |
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TOTAL ASSETS |
| $ | 89,912 |
| $ | 142,183 |
| $ | 9,915 | $ | 5,960 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accounts payable and accrued liabilities |
| $ | 133,467 |
| $ | 135,067 |
| $ | 380,735 | $ | 222,778 | ||||
Accounts payable to related party |
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| 173,568 |
| 291,372 |
| 379,126 | 119,655 | |||||||
| Related party advances | 12,400 | — | |||||||||||||
Advances payable |
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| 59,650 |
| 59,650 |
| 59,650 | 59,650 | |||||||
Current portion of convertible notes payable, net of discount of $34,923 and $52,205, respectively |
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| 155,077 |
| 113,795 |
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Current portion of accrued interest payable |
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| 227,372 |
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| 227,734 |
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| Current portion of convertible notes payable | 20,000 | 20,000 | |||||||||||||
| Series G Preferred Stock Liability, net of discount of $12,581 and $21,575, respectively | 126,294 | 86,130 | |||||||||||||
| Accrued interest payable | 226,270 | 223,568 | |||||||||||||
Total current liabilities |
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| 749,134 |
| 827,618 |
| 1,204,475 | 731,781 | |||||||
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TOTAL LIABILITIES |
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| 749,134 |
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| 827,618 |
| 1,204,475 | 731,781 | ||||||
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COMMITMENTS AND CONTINGENCIES |
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| — |
| — |
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STOCKHOLDERS’ DEFICIT |
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Common stock, $0.001 par value, unlimited shares authorized; 436,218,342 and 170,467,283 shares issued and outstanding at September 30, 2020 and 2019, respectively |
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| 436,217 |
| 170,468 |
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| Common stock, $ par value, shares authorized; and shares issued and outstanding at September 30, 2022 and 2021, respectively | 722,325 | 561,494 | |||||||||||||
Preferred stock; 20,000,000 shares authorized: |
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Series A Preferred Stock, $0.001 par value, 6,000,000 shares authorized, 0 and 5,800,000 shares issued and outstanding at September 30, 2020 and 2019, respectively |
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| — |
| 4,590,535 |
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Series D Preferred Stock, $0.001 par value, 539,988 shares authorized; 509,988 shares issued and outstanding at September 30, 2020 and 2019, respectively |
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| 510 |
| 510 |
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Series E Preferred Stock, $0.001 par value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding at September 30, 2020 and 2019, respectively |
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| 1,000 |
| 1,000 |
| |||||||||
Series F Preferred Stock; $0.001 par value 501,975 shares authorized; 386,975 shares issued and outstanding at September 30, 2020 and 2019, respectively |
|
| 387 |
| 387 |
| |||||||||
| Series A Preferred Stock, $ par value, and shares issued and outstanding at September 30, 2022 and 2021, respectively | — | — | |||||||||||||
| Series B Preferred Stock, $ par value, and shares issued and outstanding at September 30, 2022 and 2021, respectively | — | — | |||||||||||||
| Series C Preferred Stock, $ par value, and shares issued and outstanding at September 30, 2022 and 2021, respectively | — | — | |||||||||||||
| Series D Preferred Stock, $ par value; shares issued and outstanding at September 30, 2022 and 2021, respectively | 510 | 510 | |||||||||||||
| Series E Preferred Stock, $ par value; shares issued and outstanding at September 30, 2022 and 2021, respectively | 1,000 | 1,000 | |||||||||||||
| Series F Preferred Stock; $ par value; and shares issued and outstanding at September 30, 2022 and 2021, respectively | 129 | 387 | |||||||||||||
Additional paid-in capital |
|
| 6,118,002 |
| 1,225,272 |
| 16,581,252 | 15,228,254 | |||||||
Accumulated other comprehensive income |
|
| — |
| — |
| |||||||||
| Stock payable, consisting of and shares to be issued at September 30, 2022 and 2021, respectively | 5,000 | 499,500 | |||||||||||||
Accumulated deficit |
|
| (7,215,338 | ) |
| (6,673,607 | ) | (18,504,776 | ) | (17,016,966 | ) | ||||
|
|
|
|
|
|
| |||||||||
TOTAL STOCKHOLDERS’ DEFICIT |
|
| (659,222 | ) |
| (685,435 | ) | (1,194,560 | ) | (725,821 | ) | ||||
|
|
|
|
|
|
| |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ | 89,912 |
| $ | 142,183 |
| $ | 9,915 | $ | 5,960 | ||||
The accompanying footnotes are an integral part of these financial statements.
- 1920 -
ANGIOSOMA INC.GLOBESTAR THERAPEUTICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| Twelve Months Ended |
| ||||
|
| September 30, |
| ||||
|
| 2020 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
REVENUE |
| $ | 77 |
| $ | 425 |
|
Cost of goods sold |
|
| 37,682 |
|
| 154 |
|
Gross profit (loss) |
|
| (37,605 | ) |
| 271 |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
General and administrative expenses |
|
| 266,066 |
|
| 316,141 |
|
Total operating expenses |
|
| 266,066 |
|
| 316,141 |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| (303,671 | ) |
| (315,870 | ) |
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
Gain on forgiveness of debt |
|
| — |
|
| 110,834 |
|
Loss on conversion of debt |
|
| — |
|
| (99,000 | ) |
Loss on marketable securities |
|
| — |
|
| (10,673 | ) |
Interest expense |
|
| (238,060 | ) |
| (360,363 | ) |
|
|
|
|
|
|
|
|
Net Loss |
| $ | (541,731 | ) | $ | (675,072 | ) |
|
|
|
|
|
|
|
|
Preferred Stock Dividend |
|
| — |
|
| (1,600,000 | ) |
|
|
|
|
|
|
|
|
Net loss available to common shareholders |
| $ | (541,731 | ) | $ | (2,275,072 | ) |
|
|
|
|
|
|
|
|
Net loss per share available to common shareholders |
| $ | (0.00 | ) | $ | (0.01 | ) |
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted |
|
| 298,091,153 |
|
| 104,775,749 |
|
The accompanying footnotes are an integral part of these consolidated financial statements.
- 20 -
ANGIOSOMA INC.
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
|
| Twelve Months Ended December 31, |
| ||||
|
| 2020 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
NET LOSS |
| $ | (541,731 | ) | $ | (675,072 | ) |
|
|
|
|
|
|
|
|
Change in fair value of AFS securities |
| $ | — |
| $ | (971 | ) |
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS |
| $ | (541,731 | ) | $ | (676,043 | ) |
| Twelve Months Ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| REVENUE | $ | — | $ | — | ||||
| Cost of goods sold | — | 2,412 | ||||||
| Gross profit (loss) | — | (2,412 | ) | |||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | 1,265,065 | 9,091,817 | ||||||
| Total operating expenses | 1,265,065 | 9,091,817 | ||||||
| LOSS FROM OPERATIONS | (1,265,065 | ) | (9,094,229 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Loss on settlement of liabilities, related party | (146,460 | ) | (419,900 | ) | ||||
| Loss on conversion of preferred stock liability | (5,939 | ) | — | |||||
| Interest expense | (70,346 | ) | (287,499 | ) | ||||
| Total other expenses | (222,745 | ) | (707,399 | ) | ||||
| Net loss | $ | (1,487,810 | ) | $ | (9,801,628 | ) | ||
| Net loss per share available to common shareholders | $ | (0.00 | ) | $ | (0.02 | ) | ||
| Weighted average shares outstanding - basic and diluted | 628,539,782 | 482,090,099 | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
- 21 -