UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedSeptemberJune 30, 20172022

OR

[  ]☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission file number 000-54830

SUNSTOCK, INC.

(Exact Name of Registrant as Specified in its Charter)

SANDGATE ACQUISITION CORPORATION

(Former Name of Registrant as Specified in its Charter)

111 Vista Creek Circle

Sacramento, California95835

(Address of principal executive offices) (zip code)

916-860-9622916-860-9622

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act:

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 [X] ☒ No [  ]☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). [X] ☒ Yes [  ] ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 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 [X] ☒

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 the number of shares outstanding of each of the issuer’s classes of stock, as of the latest practicable date.

Documents incorporated by reference: None

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUNSTOCK, INC.

CONDENSED AND CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of the unaudited condensed and consolidated financial statements

SUNSTOCK, INC.

CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)(unaudited)

The accompanying notes are an integral part of the unaudited condensed and consolidated financial statements.statements

SUNSTOCK, INC.

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWSCONVERTIBLE PREFERRED STOCK AND CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

The accompanying notes are an integral part of the unaudited condensed and consolidated financial statements

SUNSTOCK, INC.

CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)(unaudited)

NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Sunstock, Inc. (formerly known as Sandgate Acquisition Corporation) (“Sunstock” or “the Company”) was incorporated on July 23, 2012, as Sandgate Acquisition Corporation, under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Sunstock operations to date have been limited toIn July 2013, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its common stock. Sunstock may attempt to locatethen existing officers and negotiatedirectors. In connection with a business entity for the combinationchange of that target company with Sunstock, (See Note 9). The combination will normally takecontrol, the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances, the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368shareholders of the Internal Revenue CodeCompany and its board of 1986,directors unanimously approved the change of the Company’s name from Sandgate Acquisition Corporation to Sunstock, Inc. On July 18, 2013, Jason Chang and Dr. Ramnik S Clair were named as amended. No assurances can be given thatdirectors of the Company.

On October 22, 2018, Sunstock, will be successfulInc. acquired all assets and liabilities of Mom’s Silver Shop, Inc. (the “Retail Store”) located in locating or negotiating with any target company.Sacramento, California.

In December 2014,The Company’s business plan includes the Company purchased 100 ounces of silver. In 2015, the Company purchased additional precious metals for $302,429buying, selling and shifting more of its capital to the acquisition of precious metals. The Company holds physical coins and bullion rather than contracts for deliverydistribution of precious metals, or certificates. In time of economic crisis, thereprimarily gold. The Company pursues a “ground to coin” strategy, whereby it seeks to acquire mining assets as well as rights to purchase mining production and to sell these metals primarily through retail channels including their own branded coins. The Company emphasizes investment in enduring assets that we believe may be no guaranteeprovide ‘resource to retail’ conversion upside. Our goal is to provide our shareholders with an exceptional opportunity to capture value in the precious metals sector without incurring many of the delivery of precious metals as contractscosts and certificates may exceed available stock.risks associated with actual mining operations.

Currently, the Company anticipates holding its precious metals as a long-term investment. Depending on market conditions, the Company anticipates holding its silver holdings until the market price exceeds $50. Likewise, the Company does not plan to sell its gold holdings unless the market price exceeds $2,500.

BASIS OF PRESENTATION

The accompanying unaudited condensed and consolidated financial statements of Sunstock, Inc. were prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with U.S. GAAP.

The accompanying condensed and consolidated balance sheet as ofat December 31, 2016, which2021, has been derived from audited consolidated financial statements, andbut does not include all disclosures required by accounting principles generally accepted in the interimUnited States of America (“U.S. GAAP”). The accompanying unaudited condensed and consolidated financial statements as of June 30, 20172022 and 2016for the three and six months ended June 30, 2022 and 2021, have been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP)U.S. GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X. These condensed financial statementsAccordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Therefore, these unaudited condensed financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements and related notes theretoto the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, included in2021 as filed with the Company’s Form 10-K.

The condensed financial statements included herein as ofU.S. Securities and for the three months ended June 30, 2017 and 2016 are unaudited; however, they contain all normal recurring accruals and adjustments that, inExchange Commission (SEC). In the opinion of management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made to the Company’s management, areunaudited condensed and consolidated financial statements. The unaudited condensed and consolidated financial statements include all material adjustments (consisting of all normal accruals) necessary to present fairlymake the condensed and consolidated financial position of the Companystatements not misleading as of June 30, 2017, the condensedrequired by Regulation S-X Rule 10-01. Operating results of its operations and cash flows for the three and six months ended June 30, 2017 and 2016 and the condensed cash flows for the nine months ended September 30, 2017 and 2016. The results of operations for three and nine months ended September 30, 20172022 are not necessarily indicative of the results tothat may be expected for the full year ended December 31, 2022 or any future interim periods.

USE OF ESTIMATES

The preparation of the unaudited condensed and consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Significant estimates made by the Company’s management include but are not limited torealizability and valuation of marketable securities, and derivative liabilities, realizability of inventories and value of stock-based transactions.

INVENTORIESCONCENTRATION OF RISK

InventoriesFinancial instruments that potentially subject the Company to concentrations of credit risk consist principally of merchandisecash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of June 30, 2022 and December 31, 2021.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

INVENTORIES

INVENTORY - COINS

The Company acquires collectible coins from both companies and individuals and then marks them up for sale and are statedresale. The inventory is recorded at the lower of cost or market determined on a first-in, first-out (FIFO) method. When a purchase contains multiple copies of the same item, they are statedor net realizable value. Inventory can fluctuate in relation to when it is purchased and when it is sold. Collectible coins inventory was $784,100 at average cost.June 30, 2022 compared to $669,798 at December 31, 2021.

Inventories – silver consists primarily of silver and small amounts of gold held for sale and are stated at cost. Currently, the Company anticipates holding its precious metals as a long-term investment. Depending on market conditions, the Company anticipates holding its silver holdings until the market price exceeds $50. Likewise, the Company does not plan to sell its gold holdings unless the market price exceeds $2,500.

At each balance sheet date, the Company evaluates its ending inventory quantities on hand and on order and records a provision for excess quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventories.

INVENTORY – PRECIOUS METALS

Inventories of precious metals and coins held for investment at June 30, 2022 include $671,872 of gold and silver bullion and bullion coins and $722,867 at December 31, 2021 and are acquired and initially recorded at fair market value. The fair market value of the bullion and bullion coins is comprised of two components: 1) published market values attributable to the costs of the raw precious metal, and 2) a published premium paid at acquisition of the metal. The premium is attributable to the additional value of the product in its finished goods form and the market value attributable solely to the premium may be readily determined, as it is published by multiple reputable sources such as Kitco and Apmex. The Company’s inventory is subsequently recorded at fair market values on a quarterly basis. The fair value of the inventory is determined using pricing and data derived from the markets on which the underlying commodities are traded. Precious metals commodities inventories are classified in Level 1 of the valuation hierarchy as defined later in this section. The Company has continuously experienced a shortage of cash and has had significantly past due obligations. While the Company’s preference is to hold the silver and gold bullion to achieve long-term gains, the bullion is available to pay current obligations should the Company not be able to raise cash through issuance of stock or notes payable. Thus, the Company believes that including the gold and silver bullion in current assets under inventory is appropriate.

INVENTORY – PRECIOUS METALS (CONTINUED)

The change in fair value of the precious metals was included in the financial statements herein as recorded on the Company’s Statements of Operations as an unrealized loss in precious metal of $96,253 for the three months ended June 30, 2022, an unrealized gain in precious metals of $33,883 for the three months ended June 30, 2021, an unrealized loss of $50,996 for the six months ended June 30, 2022, and an unrealized loss of $26,784 for the six months ended June 30, 2021.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 to 5 years. Any leasehold improvements are amortized at the lesser of the useful life of the asset or the lease term.

LONG-LIVED ASSETS

The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset. NaN impairment charges were incurred during the six months ended June 30, 2022 and 2021. There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.

REVENUE RECOGNITION

The Company’s principal activities from which it generates revenue are product sales. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time of sale via credit card, check, or cash when products are sold direct to consumers.

A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of a product to customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. The Company has concluded the sale of product and related shipping and handling are accounted for as the single performance obligation.

The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled to receive in exchange for transferring goods to the customer. We do not issue refunds.

The Company recognizes revenuesrevenue when it satisfies a performance obligation in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Certification (ASC”) Topic 605. Accordingly,a contract by transferring control over a product to a customer when product is shipped based on fulfillment by the Company recognizes revenuesor when therea point of sale transaction is persuasivecompleted. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales. The Company does not accept returns.

INCOME TAXES

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixedsome or determinable, and collectabilityall of the transactiondeferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Company’s income tax provision consists of state minimum taxes.

The Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is assured.more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

EARNINGSThere are no unrecognized tax benefits included in the balance sheet that would, if recognized, affect the effective tax rate.

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had $0 accrued for interest and penalties on each of the Company’s balance sheets at June 30, 2022 and December 31, 2021.

INCOME (LOSS) PER COMMON SHARE

Basic earningsincome (loss) per share represents income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period which excluded unvested restricted stock.period. Diluted earningsincome (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance. The potentialcommonCompany had no potential common shares that may be issued by the Company relate to outstanding stock options and have been excluded from the computation of diluted earnings (loss) per share because they would reduce the reported loss per share and therefore have an anti-dilutive effect.

Asas of June 30, 2017, there were no potentially dilutive2022.

Effective July 21, 2021, the Company effected a 1,000 for 1 reverse split of its common shares that were excluded from(see Note 9). The weighted number of shares outstanding as of the diluted earnings (loss) per share as their effect wouldthree and six months ended June 30, 2021 on the statements of operations have been antidilutive for each ofadjusted to reflect the periods presented.reverse split.

STOCK BASED COMPENSATIONFAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 718 “Compensation - Stock Compensation” prescribes accounting and reporting standards for all stock-based payment awards to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, may be classified as either equity or liabilities. The Company determines if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction is recognized as a liability; otherwise, the transaction is recognized as equity.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based onmeasures the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

In July 2017, the FASB issued ASU No. 2017-11, which eliminates the requirement to classify financial instruments as derivative liabilities simply because they have down round pricing protection. The Company has often issued warrants with down round pricing protection as partcertain of its financing activities. Currently, the Company has convertible notes payable and warrants with down round pricing protection that are classified as derivative liabilities. The Company revalues these warrant tranches each reporting period and records the valuation differences asfinancial assets on a component of other income in the statement of operations. The adoption of this ASU will allow the Company to classify its remaining warrant derivatives as equity and future warrants that might be issued by the Company with down round price protection will qualify as equity rather than derivative liability for balance sheet presentation purposes. This ASU is effective for annual periods beginning after December 15, 2018, and early adoption is permitted. The Company is determining the financial impact of this ASU.

Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. U.S. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The establishedrecurring basis. A fair value hierarchy prioritizesis used to rank the usequality and reliability of inputsthe information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in valuation methodologies intoone of the following three levels:categories:

Level 1:1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.liabilities;

Level 2: Significant other observable inputs2 – Inputs other than Level 1 pricesthat are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets or liabilities;and liabilities, unadjusted quoted prices in the markets that are not active;active, or other inputs that are observable or can be corroborated by observable market data.data for substantially the full term of the assets or liabilities; and

Level 3: Significant unobservable3 – Unobservable inputs that reflect a reporting entity’s own assumptions aboutare supported by little or no market activity and that are significant to the assumptions that market participants would usefair value of the assets or liabilities, such as derivative liabilities in pricing an asset or liability. For example, level 3 inputs would relaterelation to forecaststhe conversion feature of future earningsnotes payable.

FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

At June 30, 2022 and cash flows used in a discounted future cash flows method.

TheDecember 31, 2021, the Company’s financial instruments consistinclude cash, precious metals inventory, coins inventory, PPP loan, SBA loan, and accounts payable and accrued expenses. The carrying amount of cash, precious metals inventory, coins inventory, PPP loan, SBA loan, and accounts payable and accrued expenses notes payable and convertible notes payable. The carrying value for all such instruments approximates fair value due to the short-term naturematurities of thethese instruments.

The Company uses Level 3PRINCIPLES OF CONSOLIDATION

We consolidate entities that we control due to ownership of the fair value hierarchy to measure the fair value of the derivative liabilitiesa majority voting interest. All intercompany balances and revalues its derivative convertible notes at every reporting period and recognizes gains or lossestransactions have been eliminated in the statements of operations that are attributable to the change in the fair value of the derivative convertible notes, preferred stock and warrant liabilities.consolidation.

NOTE 2 - GOING CONCERN

The Company has not posted annual operating income since inception. It has an accumulated deficit of approximately $36,000,000$62,255,807 as of SeptemberJune 30, 2017. These matters raise substantial doubt about the Company’s ability to continue as a going concern.2022. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern.

These unaudited condensed and consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiatingnegotiate with an acquisition target.a business entity for the combination of that target company with the Company.

There is no assurance that the Company will ever be profitable. The unaudited condensed and consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

The Company intends to initiate discussions with an undetermined third party in regards to raising funds through a private placement of equity which, if it occurs, will provide the Company with funds to expand its operations and likely eliminate the going concern issue.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS– PROPERTY AND EQUIPMENT

SCHEDULE OF PROPERTY AND EQUIPMENT

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2014-09. “Revenue from Contracts with Customers.” This new standard will replace the existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is the recognition of revenueDepreciation expense for the transfer of goodsthree months ended June 30, 2022 and services equal to the amount an entity expects to receive for those goods2021 was $240 and services. This ASU requires additional disclosures about the nature, amount, timing$732, respectively, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates and changes in those estimates. For public entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. While we are still currently assessing the impact of the new standard, our revenue is generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. The timing of revenue recognition for these product sales are not materially impacted by the new standard. We will update certain disclosures, as applicable to meet the requirements of the new guidance.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the Company’s financial statements.

In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation - Stock Compensation. The ASU involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. Certain of these changes are required to be applied retrospectively, while other changes are required to be applied prospectively. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. As a result of the adoption of this ASU as of January 1, 2017, we have made an entity-wide accounting policy election to account for forfeitures when they occur. There is no cumulative-effect adjustment as a result of the adoption of this ASU as our estimated forfeiture rate prior to adoption of this ASU was 0%. The adoption of this ASU did not have a material impact on our condensed financial statements and related disclosures.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. Current U.S. GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS) and are effective for fiscal years after December 15, 2016, including interim periods within those annual periods. The adoption of this ASU as of January 1, 2017 did not have a material impact on our condensed financial statements and related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Topic 330. Inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this ASU more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in IFRS. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of this ASU as of January 1, 2017 did not have a material impact on our condensed financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU 2014-15 describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the condensed consolidated financial statements. The standard provides accounting guidance that will be used along with existing auditing standards. The ASU 2014-15 is effective for the annual period ending after December 15, 2016. Early application is permitted. The adoption of this ASU as of January 1, 2017 did not have a material impact on our condensed financial statementssix months ended June 30, 2022 and related disclosures.2021 was $594 and $1,493, respectively.

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

NOTE 5 - RELATED PARTY BALANCESACTIVITY

During the periodsix months ended SeptemberJune 30, 2017 and year ended December 31, 2016,2022, the Company was provided a non-interest bearing, non-secured lineloans totaling $120,300 by the Company’s chief executive officer. The loans bear interest at 6% per annum. There was $8,655 in accrued interest at June 30, 2022.

As of credit by a shareholder for up to $30,000. The lineJune 30, 2022, the Company has $36,326 in accrued dividends on preferred stock, of which $19,141 is due on demand. At September 30, 2017 and year ended December 31, 2016,to the Company had net borrowings of approximately $0 and $30,000, respectively, and is still available to draw down. At December 31, 2016, the amount is included in accounts payable in the accompanying condensed balance sheets. See Note 6 for shares of stock issued to related parties.Company’s chief executive officer.

During the quartersix months ended June 30, 2017,2021, the Company enteredwas provided loans totaling $139,100 by the Company’s chief executive officer. The loans bear interest at 6% per annum.

During the six months ended June 30, 2021, $230,500 in notes payable and $4,871 accrued interest to the Company’s chief executive officer were converted to 784,570 shares of the Company’s common stock valued at $2,011,038 based on the closing price on the grant date. $1,775,668 was recorded as loss on settlement of related party debt on the accompanying statement of operations as of June 30, 2021.

During the six months ended June 30, 2021, the Company issued to the chief executive officer 400,000 shares of the Company’s common stock in exchange for 400,000 shares of the Company’s Series A convertible Preferred Stock.

The following table is a 19-month lease withsummary of the parents of Jason Changactivity for Corporate office space at $1,200 per month running through December 2018.Loans payable- related parties principal for the six months ended June 30, 2022:

SUMMARY OF THE ACTIVITY FOR LOANS PAYABLE- RELATED PARTIES

NOTE 5 - 6 – COMMITMENTS AND CONTINGIENCIESCONTINGENCIES

The Company entered into a lease agreement in December 2015leases space for 2,700 square feet of retail shop space to replace their previous location below. the Retail Store. The lease requires combined monthlyis for five years and runs through September 2023. The lease calls for payments of base rent$1,305.60 per month for the first year, with a 3% increase per year for years two through five.

As of $1,950June 30, 2022, the future payments of our operating lease were as follows for six months beginningthe periods ended December 31:

SCHEDULE OF FUTURE PAYMENTS OF OPERATING LEASE PAYMENTS

LITIGATION

On August 21, 2020, Boustead Securities, LLC (“Boustead”) filed suit against Sunstock, Inc. (“Sunstock”) in the County of Orange, California. Boustead is an investment banking firm engaged by Sunstock on September 19, 2019 to raise equity. Boustead maintained that Sunstock owes it 87,179 shares of Preferred Stock Warrants and 9,231 shares of Common Stock Warrants. Boustead also sought general damages, interest, and costs of the suit. Sunstock believed that Boustead had not fulfilled its obligations in raising equity and vigorously contested the suit. Sunstock hired an arbitrator but there was no resolution between Sunstock and Boustead. The matter went to trial in September 2021 and on November 2, 2021 the Court determined that Sunstock owed Boustead $260,308 for warrants issued that Sunstock did not honor. $260,308 was accrued and is shown as part of accounts payable and accrued expenses in the balance sheet. See detail in Note 4 above. The warrants are no longer outstanding (see Note 9). All other monetary claims by Boustead were dismissed by the Court. The $260,308 is to be paid in cash. The Company filed an appeal of the judgment on December 9, 2021. There has been no change as of the date of this report.

In December 2020, a former employee of Sunstock filed a claim with the California Labor Commission regarding claimed back pay owed. A preliminary hearing was held on January 2015 with an option for an additional one year running through June of 2017. This lease4, 2021 and the Company is currently on a month to month basis at September 30, 2017.awaiting the next step.

During June of 2017, the Company entered into a three-month consulting agreement with PAG Group, LLC., to help develop business growth opportunities through September 2017 for $20,000.

During the quarter ended June 30, 2017, the Company entered a 19-month lease with the parents of Jason Chang for Corporate office space at $1,200 per month running through December 2018.

In addition to these commitments please see below Note 9 – Subsequent Events for activities in October 2017.

LITIGATION

In December 2013, the Company issued 75,000 shares of common stock to a third party (the “Shareholder”) for consideration of $16,000. Such consideration was received directly by Jason Chang, CEO, and was not deposited into the Company’s bank account. As the funds had not been received by the Company, such amounts have been recorded as compensation to Mr. Chang as of December 31, 2014 (see Note 5). In April 2014, the Company received notice from the Shareholder that he had filed a lawsuit against the Company and its CEO relating to the delay in the complainants’ stock reaching public listing services. The Company had made efforts to settle this issue, without an agreement being reached. As such, the Company has recorded a loss contingency based on its best estimate of all costs to be incurred for the ultimate settlement of this matter. In June 2016, the Company settled for $82,660 which has been reflected in accrued litigation on the accompanying balance sheet as of September 30, 2017 and December 31, 2016. Repayment of which is anticipated in the 4th quarter of 2017.

INDEMNITIES AND GUARANTEES

The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Delaware. AboutIn connection with its facility leases, the Company has agreed to indemnify its lessors for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies, and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company entered into a lease agreement in December 2015 for 2,700 square feet of retail shop space. The lease requires combined monthly payments of base rent of $1,950 for six months beginning January 2015 with an option for an additional one year running through June of 2017. Currently the Company is on a month to month agreement.

Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheet.sheets.

NOTE 6 – OUTSTSANDING DEBTCONTINGENCIES

Convertible notes payable are as followsThe full impact of the COVID-19 outbreak continues to evolve as of September 30, 2017:

On May 24, 2017, the Company entered a Convertible Promissory Note with Auctus Fund, LLC., (“Auctus”) in the principle amount of $112,250 (the “Auctus Note”) The Auctus Note bears interest at the rate of 12% per annum (24% upon an event of default) and is due and payable on February 24, 2018. The principle amount of the Auctus Note and all accrued interest is convertible at the option of the holder at the lower of (a) 55% multiplied by the average of the two lowest trading prices during the 25 trading days prior to the date of this report. Management is actively monitoring the noteglobal situation on its financial condition, liquidity operations, suppliers, industry, and (b) 55%, (a 45% discount) multiplied byworkforce. Given the average market price (the trading period preceding 25 daysdaily evolution of the conversion date). The variable conversion term was a derivative liabilityCOVID-19 outbreak and the global responses to curb its spread, the Company recorded approximately $100,000 of debt discount upon issuance. The prepayment amount ranges from 135%is not able to 140%estimate the effects of the outstanding principle plus accrued interestCOVID-19 outbreak on its results of operations, financial condition or liquidity for the note, depending on whenfiscal year 2022. However, to date there has not been a decrease in sales. The Company believes that in this time of uncertainty, individuals are buying collectible coins as a safe haven. The Company is unable to predict if such prepayment is made. In addition,buying will continue during this time of uncertainty or if the Company recognized issuance costs of $12,750 on the funding datebuying will decrease as events change and amortized such costs as interest expense over the term of the note.evolve.

On June 5, 2017, the Company entered a Convertible Promissory Note with EMA Financial, LLC., (“EMA”) in the principle amount of $115,000 (the “EMA Note”). The EMA Note bears interest at the rate of 10% per annum (24% upon an event of default) and is due and payable on June 5, 2018. The principle amount of the EMA Note and all accrued interest is convertible at the option of the holder at the lower of (a) the closing sales price 50% and (b) (a 50% discount) multiplied by the average market price (the trading period preceding 25 days of the conversion date) or the closing bid price. The variable conversion term was a derivative liability, see Note 7, and the Company recorded approximately $115,000 of debt discount upon issuance. The prepayment amount ranges from 135% to 150% of the outstanding principle plus accrued interest of the note, depending on when such prepayment is made. In addition, the Company recognized issuance costs of $15,000 on the funding date and amortized such costs as interest expense over the term of the note.

NOTE 7 – DERIVATIVE LIABILITIESSBA LOAN

TheIn June 2020, the Company evaluates its debt instruments, or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for underreceived a $150,000 loan (less $100 expense) from the relevant sections of ASC Topic 815-40,Derivative Instruments and Hedging: Contracts in Entity’s Own EquitySmall Business Administration (“SBA”). The resultloan is for thirty years, interest is 3.75% per annum, and payments of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument$731 are monthly beginning twenty-four months after closing.

SCHEDULE OF FUTURE PAYMENTS OF DEBT

In February and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.

Certain of the Company’s embedded conversion features on debt are treated as derivatives for accounting purposes. The Company estimates the fair value of these embedded conversion features using the Black-Scholes Merton option pricing model (“Black-Scholes”). Based on these provisions,May 2021, the Company has classified all conversion featuresreceived a $15,125 loan and warrants as derivative liabilities at September 30, 2017.a $15,125 loan from the federal Paycheck Protection Program (“PPP”), respectively. The loans are for five years, interest is 1.0% per annum, and no payments are due until maturity. The loans have been forgiven.

The Company applies the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity’s own stock. The standard applies to any freestanding financial instrument or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.NOTE 9- STOCKHOLDERS’ EQUITY

From time to time, the Company has issued notes with embedded conversion features. Certain of the embedded conversion features contain price protection or anti-dilution features that result in these instruments being treated as derivatives. Accordingly, the Company has estimated the fair value of these embedded conversion features using Black-Scholes with the following assumptions:COMMON STOCK

The following table presents the changes in fair value of our embedded conversion features measured at fair value on a recurring basis for nine months ended September 30, 2017:

NOTE 8 - STOCKHOLDER’S EQUITY

The Company is authorized to issue 300,000,0005,000,000,000 shares of common stock and 20,000,000 shares1,500,000,000 of preferred stock.

Effective July 21, 2021, the Company effected a 1,000 for 1 reverse split of its common shares. The weighted number of shares outstanding as of the three and six months ended June 30, 2021 on the unaudited condensed and consolidated statements of operations have been adjusted to reflect the reverse split. The number of common shares and the dollar amounts of common shares and additional paid-in capital for all periods on the unaudited condensed and consolidated statements of stockholders’ equity (deficit) for all periods have been adjusted to reflect the reverse split.

During 2016,the six months ended June 30, 2022, the Company issued an aggregate of 330,000 shares of fully vested non-forfeitable shares of common stock to certain consultants of the Company to be earned over a one-year period. The shares were valued at $403,500 (based on the closing market price on the measurement date) of which $720 was received in cash and the remaining $402,780 was recorded as prepaid consulting. The Company has amortized the final portion of this prepaid expense of approximately $30,000 during the first quarter of 2017.

During the year ended December 31, 2016, the Company issued an aggregate of 6,600,000 shares of restricted stock to certain employees for future services (See Note 7 of our Annual Report on Form 10-K as of and for the year ended December 31, 2016 for details). During the nine months ended September 30, 2017, the Company recorded approximately $2,500,000 in stock based compensation expense related to the vesting terms of such restricted shares.

During the nine months ended September 30, 2017, the Company received an aggregate of $4,460 from the issuance of 326,0000 shares of its common stock. In addition, the Company booked proceeds of $60 in relation to the sale of 60,000 shares issued in October 2017 in common stock payable.

During the ninesix months ended SeptemberJune 30, 2017,2021, the Company issued 8,190,000784,570 shares of fully vested non-forfeitable shares ofits common stock to certain consultantsits chief executive officer for future services. The fair valuethe conversion of the shares issued was determined to be approximately $9,800,000,$230,500 of which, $6,000 is included in subscription receivable,related party notes payable and the remaining amount was recorded as prepaid consulting. $4,871 accrued interest payable.

PREFERRED STOCK

During the three months and ninesix months ended SeptemberJune 30, 2017, the Company amortized approximately $4,000,000 and $7,100,000 (based on the closing price on the measurement date), respectively, to stock based compensation expense related to these issuances.

During the nine months ended September 30, 2017, the Company’s CEO, Jason Chang was awarded 18.05 million of the Company’s common stock for services valued at an aggregate of approximately $19,500,000 (based on the closing price on the grant date), of which $9,050 was received in cash and the remaining amount will be recorded as stock based compensation expense in the accompanying statement of operations as the amounts are earned through December 31, 2017. During the three months and nine months ended September 30, 2017, the Company recorded approximately $3,200,000 and $16,300,000, respectively, to stock based compensation expense related to these issuances. In addition, the Company booked a common stock payable of $800,000, of which $1,250 was received in cash, for 1,250,000 shares issued to Jason Chang in October 2017 (included in common stock payable at September 31, 2017).

During the nine months ended September 30, 2017,2021, the Company issued 2,100,000400,000 shares of Common Stockits common stock to other employeesits chief executive officer for future services. the conversion of 400,000 shares of Series A convertible Preferred Stock.

NOTE 10 – SUBSEQUENT EVENTS

The fair valueCompany follows the guidance in FASB ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the sharesbalance sheet date but before the consolidated financial statements are issued was determinedor are available to be approximately $2,900,000 based onissued. ASC 855 sets forth (i) the market priceperiod after the balance sheet date during which management of the restricted stock on the measurement date and to be amortized to stock-based compensation expense over the term of the requisite service period. During the three months and nine months ended September 30, 2017, the Company recorded approximately $2,000,000 and $2,900,000, respectively, to stock based compensation expense related to these issuances.

NOTE 9 - SUBSEQUENT EVENTS

Notes Payable:

On October 11, 2017, Sunstock, Inc. (the “Company”a reporting entity evaluates events or “we”) entered into a securities purchase agreement (“SPA”) with Auctus Fund, LLC, upon the terms and subject to the conditions of SPA, we issued a convertible promissory notetransactions that may occur for potential recognition or disclosure in the principal amount of $85,000.00 (the “Note”) to Auctus. unaudited condensed and consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its condensed and consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

The Company received proceedshas no subsequent events as of $74,250.00 in cash from Auctus. Interest accrues on the outstanding principal amount of the Note at the rate of 12% per year. The Note is due and payable on July 11, 2018. The Note is convertible into common stock, subject to Rule 144, at any time after the issue date, at the lower of (i) the lowest trading price during the previous twenty-five trading days prior to the date of the Note, and (ii) 50% multiplied by the lowest trading price during the twenty-five trading days prior to the conversion date. If the shares are not delivered to Auctus within three business days of the Company’s receipt of the conversion notice, the Company will pay Auctus a penalty of $2,000 per day for each day that the Company fails to deliver such common stock through willful acts designed to hinder the delivery of common stock to Auctus. Auctus does not have the right to convert the Note, to the extent that it would beneficially own in excess of 4.99% of our outstanding common stock. The Company shall have the right, exercisable on not less than three (3) trading days’ prior written notice to Auctus, to prepay the outstanding balance on this Note for (i) 135% of all unpaid principal and interest if paid within 90 days of the issue date and (ii) 150% of all unpaid principal and interest starting on the 91st day following the issue date. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the Auctus Note becomes immediately due and payable. Regarding the Note, the Company paid Auctus $10,750.00 for its expenses and legal fees.report.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with the unaudited condensed and consolidated financial statements and notes thereto appearing elsewhere in this report. For additional context with which to understand our financial condition and results of operations, see the discussion and analysis included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2016,2021, filed with the Securities and Exchange Commission (“SEC”) on April 27, 2017,18, 2022, as well as the unaudited condensed and consolidated financial statements and related notes contained therein.

Forward Looking Statements

Certain statements in this report, including information incorporated by reference, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements reflect current views about future events and financial performance based on certain assumptions. They include opinions, forecasts, intentions, plans, goals, projections, guidance, expectations, beliefs or other statements that are not statements of historical fact. Words such as “may,” “should,” “could,” “would,” “expects,” “plans,” “believes,” “anticipates,” “intends,” “estimates,” “approximates,” “predicts,” or “projects,” or the negative or other variation of such words, and similar expressions may identify a statement as a forward-looking statement. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, our goals, strategies, focus and plans, and other characterizations of future events or circumstances, including statements expressing general optimism about future operating results and the development of our products, are forward-looking statements.

Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those discussed elsewhere in this Quarterly Report on Form 10-Q. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We file reports with the SEC. You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

Overview

Sunstock, Inc., formerly Sandgate Acquisition Corporation (“Sunstock” or “the Company”) was incorporated on July 23, 2012, as Sandgate Acquisition Corporation, under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

Management continue to developOn July 18, 2013, the Company forchanged its’ name from Sandgate Acquisition Corporation to Sunstock, Inc. On the acquisitionsame date, Jason Chang and operationDr. Ramnik S Clair were named as directors of hotels, discount retail stores,the Company.

On October 22, 2018, the Company acquired all assets and residential propertiesliabilities of the Retail Store of Sacramento, California. The Retail Store specializes in buying and selling gold, silver, and rare coins, and is one of the leading precious metals retailers in the high demand areas of California, particularly Southern California and the San Francisco Bay Area. In December 2014, the Company commenced their investment in precious metals. At September 30, 2017, the Company has $378,704 in the inventory - silver.greater Sacramento metropolitan area.

In analyzing prospective business opportunities, Sunstock may consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which may be anticipated; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. This discussion of the proposed criteria is not meant to be restrictive of the virtually unlimited discretion of Sunstock to search for and enter potential business opportunities.

Going Concern

The Company has not posted operating income and has not generated cash from operations since inception. It has an accumulated deficit of approximately $36,000,000$62,255,807 as of SeptemberJune 30, 2017. These matters raise2022. The Company did not generate cash flow from operations for the six months ended June 30, 2022 and the year ended December 31, 2021. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties.

These Condensedunaudited condensed and consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiatingnegotiate with an acquisition target.a business entity for the combination of that target company with the Company.

There is no assurance that the Company will ever be profitable. The condensedconsolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

In the first quarter of 2020, outstanding convertible notes payable balances as of December 31, 2019, were either converted to common stock or paid off. In relation to that, the Company had discussions with a third party in regards to raising funds through a private placement of equity. Those discussions with that third party have since been terminated. The Company intends to initiate discussions with an undetermined third party in regards to raising funds through a private placement of equity which, if it occurs, will provide the Company with funds to expand its operations and likely eliminate the going concern issue.

Critical Accounting Policies

There have been no material changes from the critical accounting policies as previously discussed in our Annual Report on Form 10-K for the year ended December 31, 2016.2021.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation - Stock Compensation. The ASU involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. Certain of these changes are required to be applied retrospectively, while other changes are required to be applied prospectively. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. As a result of the adoption of this ASU as of January 1, 2017, we have made an entity-wide accounting policy election to account for forfeitures when they occur. There is no cumulative-effect adjustment as a result of the adoption of this ASU as our estimated forfeiture rate prior to adoption of this ASU was 0%. The adoption of this ASU did not have a material impact on our condensed financial statements and related disclosures.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. Current U.S. GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS) and are effective for fiscal years after December 15, 2016, including interim periods within those annual periods. The adoption of this ASU as of January 1, 2017 did not have a material impact on our condensed financial statements and related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Topic 330. Inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this ASU more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in IFRS. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of this ASU as of January 1, 2017 did not have a material impact on our condensed financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU 2014-15 describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the condensed consolidated financial statements. The standard provides accounting guidance that will be used along with existing auditing standards. The ASU 2014-15 is effective for the annual period ending after December 15, 2016. Early application is permitted. The adoption of this ASU as of January 1, 2017 did not have a material impact on our condensed financial statements and related disclosures.

Results of Operations

Discussion of the Three Months ended SeptemberJune 30, 20172022 and 20162021

The Company generated revenues during the three months ended SeptemberJune 30, 20172022 of $1,601$3,270,927 as compared to $9,966$3,114,794 in revenues posted for the three months ended SeptemberJune 30, 2016.2021. The decreaseincrease in revenues is primarily due to the reduced emphasis on retail salesmore aggressive pricing by Sunstock in order to hotel management focus.increase revenues and more customers seeking a safe haven in uncertain times.

For the three months ended SeptemberJune 30, 20172022 and 20162021, cost of sales was $1,137were $3,201,080 and $5,335,$3,077,899, respectively, which increase was driven by the decreaseincrease in revenues as disclosed above. Operating expenses increasedProfessional fees decreased to $10,294,883$53,518 from $79,922 for the three months ended SeptemberJune 30, 20172022 and 2021, respectively, primarily due to lower consultant fees and audit fees. Compensation decreased to $182 from $1,063,768$13,954 for the same periodthree months ended June 30, 2022 and 2021, respectively. Other operating expenses decreased to $9,167 from $12,104 for the three months ended June 30, 2022 and 2021, respectively.

Interest expense was $1,443 and $1,443 for the three months ended June 30, 2022 and 2021, respectively. Interest expense related party increased to $3,839 for the three months ended June 30, 2022 from $316 for the three months ended June 30, 2021.

Unrealized loss on investments in precious metals was $96,253 for the three months ended June 30, 2022 compared to an unrealized gain of 2016 primarily because$33,883 for the three months ended June 30, 2021 due to the decrease in price of share-based compensation and amortizationbullion.

Loss on settlement of prepaid services.related party debt was $0 for the three months ended June 30, 2022 compared to $430,261 for the three months ended June 30, 2021.

During the three months ended SeptemberJune 30, 2017,2022, the Company posted a net loss of $3,613,118$94,555 as compared to a net loss of $1,060,714$467,222 for the three months ended SeptemberJune 30, 2016, such increase2021. Such change is primarily related to an increase in expenses related to increasegreater gross profit and less operating expenses share-based compensation, interest expensein 2022, and amortizationloss on settlement of prepaid services.

The unrealized gainrelated party debt in 2021, offset by a loss on investmentsinvestment in precious metals of $1,042 during the three months ended September 30, 2017, is relatedin 2022 compared to the increasea gain in the market value of the underlying assets held as of September 30, 2017.2021.

Discussion of the NineSix Months ended SeptemberJune 30, 20172022 and 20162021

The Company generated revenues during the ninesix months ended SeptemberJune 30, 20172022 of $8,386$6,519,910 as compared to $33,476$6,062,982 in revenues posted for the ninesix months ended SeptemberJune 30, 2016.2021. The decreaseincrease in revenues is primarily due to the reduced emphasis on retail salesmore aggressive pricing by Sunstock in order to hotel management focus.increase revenues and more customers seeking a safe haven in uncertain times.

For the ninesix months ended SeptemberJune 30, 20172022 and 20162021, cost of sales was $5,948were $6,376,447 and $17,921$5,992,591, respectively, which increase was driven by the decreaseincrease in revenues as disclosed above. OperatingProfessional fees decreased to $86,013 from $151,617 for the six months ended June 30, 2022 and 2021, respectively, primarily due to lower consultant fees and audit fees. Compensation decreased to $556 from $14,353 for the six months ended June 30, 2022 and 2021, respectively. Other operating expenses decreased to $18,340 from $28,321 for the six months ended June 30, 2022 and 2021, respectively.

Interest expense was $2,886 and $2,892 for the six months ended June 30, 2022 and 2021, respectively. Interest expense related party increased to $29,038,076$6,584 for the ninesix months ended SeptemberJune 30, 20172022 from $1,706,652$2,178 for the same period of 2016 primarily because of share-based compensation and amortization of prepaid services.

For the ninesix months ended SeptemberJune 30, 2017,2021.

Unrealized loss on investments in precious metals was $50,996 for the six months ended June 30, 2022 compared to an unrealized loss of $26,784 for the six months ended June 30, 2021 due to the increase in price of bullion.

Loss on settlement of related party debt was $0 for the six months ended June 30, 2022 compared to $1,775,668 for the six months ended June 30, 2021.

$30,250 in other income in the six months ended June 30, 2022 was in regards to the forgiveness of PPP loans.

During the six months ended June 30, 2022, the Company posted a net lossincome of $29,227,405$8,338 as compared to a net loss of $1,571,996$1,932,222 for the ninesix months ended SeptemberJune 30, 2016, such increase2021. Such change is primarily related to an increase in expenses related to increasegreater gross profit and less operating expenses share-based compensation, interest expensein 2022, a loss on settlement of related party debt in 2021, and amortizationa gain on debt extinguishment in 2022.

Liquidity and Capital Resources

As of prepaid services.June 30, 2022, the Company had $28,733 in cash and $1,455,972 in inventory of precious metals and coins compared to $30,168 in cash and $1,392,665 in inventory of precious metals and coins at December 31, 2021.

TheNet cash used in operating activities totaled $121,735 during the six months ended June 30, 2022 as compared to net cash used in operating activities of $219,268 during the six months ended June 30, 2021. Consolidated net income was $8,338 for the six months ended June 30, 2022 as compared to consolidated net loss of $1,932,222 for the six months ended June 30, 2021. Explanation of the difference between these six months of 2022 and 2021 are explained above in the results of operations of the Company.

Changes in the adjustments to reconcile net income (net loss) for the six months ended June 30, 2022 and 2021, respectively, consist of unrealized gain or loss on investmentsinvestment in precious metals, depreciation, gain on extinguishment of $17,050 duringdebt, and loss on settlement of related party debt.

Unrealized loss on investment in precious metals was $50,996 for the ninesix months ended SeptemberJune 30, 2017, is related to2022 and unrealized loss on investment in precious metals was $26,784 for the year to date increase in the market value of the underlying assets held as of September 30, 2017.

Liquidity and Capital Resources

As of September 30, 2017, the Company had $7,228 in cash and $8,716 in inventory – products and $378,704 in inventory - silver.

For ninesix months ended SeptemberJune 30, 2017,2021. Deprecation was $594 and $1,494, respectively, for the Company received proceedssix months ended June 30, 2022 and 2021. Gain on extinguishment of $13,570 fromdebt was $30,250 and $0, respectively, for the salesix months ended June 30, 2022 and 2021. Loss on settlement of common stock, (including $1,310related party debt was $0 and $1,775,668, respectively, for shares payable)the six months ended June 30, 2022 and 2021.

Changes in assets and liabilities for inventories, prepaid expenses, and accounts payable and accrued expenses totaled a decrease of $151,413 for the six months ended June 30, 2022 and a grossdecrease of $227,250$90,992 for the six months ended June 30, 2021.

No cash was used in investing activities for the six months ended June 30, 2022 and 2021, respectively.

Net cash provided by financing activities was $120,300 for the six months ended June 30, 2022 and net cash provided by financing activities was $206,950 for the six months ended June 30, 2021. $120,300 and $139,100, respectively were received from notes payable related party for the issuancesix months ended June 30, 2022 and 2021. Proceeds of convertible notes payable.$0 and $30,250, respectively, were received from a PPP loan for the six months ended June 30, 2022 and 2021. $0 and $37,600, respectively, were received from receivables from shareholders for the six months ended June 30, 2022 and 2021.

Off-balanceOff-Balance Sheet Arrangements

The Company has not entered into 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 would be considered material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information not required to be filed by Smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluationThe management of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the fiscal year under the supervision and with the participation of the Company’s principal executive officer (who is also the principal financial officer). There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. Based upon that evaluation, he believes that the Company’s disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, summarized and processed timely. The principal executive officer is directly involved in the day-to-day operations of the Company.

Management’s Report of Internal Control over Financial Reporting

The Company is responsible for establishing and maintaining adequate internal control over financial reporting. Management must evaluate its internal controls over financial reporting, as required by Sarbanes-Oxley Act, Section 404 (a). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with the Rule 13a-15U.S. generally accepted accounting principles or GAAP.

As of the Securities Exchange Act of 1934. The Company’s officer, its president, conducted an evaluation ofJune 30, 2022, management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2017 based on the criteria establishfor effective internal control over financial reporting established in the 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.Commission and SEC guidance on conducting such assessments. Based on thisthat evaluation, managementthey concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of the Company’s internal controlcontrols over financial reporting was not effective as of September 30, 2017, based on those criteria. A control system can provide only reasonably, not absolute, assurance that the objectives of the control system are metadversely affected its internal controls and no evaluation of controls can provide absolute assurance that all control issues have been detected.may be considered to be material weaknesses.

Material Weaknesses:Weaknesses:

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

ITEM 4. CONTROLS AND PROCEDURES (CONTINUED)

The material weaknesses identified are:

1. Inadequatethe Company does not have accounting personnel that have adequate technical accounting skills to identify terms in agreements that would have material accounting implications on the Company’s consolidated financial statements in accordance with US GAAP, such as permanent vs. temporary equity treatment of the Company’s preferred stock in accordance with ASC 480.

2.the Company does not obtain and retain supporting documentation over the precious metal trade dates and quantities traded and does not properly record the realized gain/loss on the trade according to the fair market value of the items traded on a given date.

3.the Company has an inadequate number of personnel that could accurately and timely record and report the Company’s consolidated financial statements in accordance with GAAP;US GAAP.

We did4. the Company does not employ an adequate number of people to ensure aperform formal risk assessments over financial reporting and does not evaluate its internal control environment that would allow for the accurate and timely reporting of the financial statements.processes.

2. Ineffective controls to ensure that the accounting for transactions are recorded in accordance with GAAP financial statements;

During the period ended September 30, 2017, adjustments were made to the general ledger, which collectively could have a material effect on the financial statements.

Notwithstanding the existence of these material weaknesses in internal control over financial reporting, we believe that the financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition in conformity with U.S. generally accepted accounting principles (GAAP). Further, we do not believe the material weaknesses identified had an impact on prior financial statements.

Remediation:Material Weaknesses:

Remediation:

As part of our ongoing remedial efforts, we have and will continue to, among other things:

1. ExpandedExpand our accounting policy and controls organization by recently hiring qualified accounting and finance personnel;

2. Increase our efforts to educate both our existing and expanded accounting policy and control organization on the application of the internal control structure;

3. Emphasize with management the importance of our internal control structure;

4. Seek outside consulting services where our existing accounting policy and control organization believes the complexity of the existing exceeds our internal capabilities; andcapabilities.

5. Plan to implement improved accounting systems.

We believe that the foregoing actions will improve our internal control over financial reporting, as well as our disclosure controls and procedures. WeWhen funds permit, we intend to perform such procedures and commit such resources as necessary to continue to allow us to overcome or mitigate these material weaknesses such that we can make timely and accurate quarterly and annual financial filings until such time as those material weaknesses are fully addressed and remediated.

ITEM 4. CONTROLS AND PROCEDURES (CONTINUED)

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting during its current fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On August 21, 2020, Boustead Securities, LLC (“Boustead”) filed suit against Sunstock, Inc. (“Sunstock”) in the County of Orange, California. Boustead is an investment banking firm engaged by Sunstock on September 19, 2019 to raise equity. Boustead maintained that Sunstock owes it 87,179 shares of Preferred Stock Warrants and 9,231 shares of Common Stock Warrants. Boustead also sought seeking general damages, interest, and costs of the suit. Sunstock believed that Boustead has not fulfilled its obligations in raising equity and vigorously contested the suit. Sunstock hired an arbitrator but there was no resolution between Sunstock and Boustead. The matter went to trial in September 2021 and on November 2, 2021 the Court determined that Sunstock owed Boustead $260,308 for warrants issued that Sunstock did not honor. $260,308 was accrued and is shown as part of accounts payable and accrued expenses in the balance sheet. See detail in Note 4 above. The warrants are no longer outstanding. All other monetary claims by Boustead were dismissed by the Court. The $260,308 is to be paid in cash. The Company filed an appeal of the judgment on December 9, 2021. There has been no change as of the date of this report.

In April 2014,December 2020, a former employee of Sunstock filed a claim with the California Labor Commission regarding claimed back pay owed. A preliminary hearing was held on January 4, 2021 and the Company received notice thatis currently awaiting the next step.

ITEM 1A. RISK FACTORS

As a shareholder had filed a lawsuit againstsmaller reporting company, we are not required to provide the Company. The Company has settled the cost ofinformation required by this lawsuit at $82,660, and has reflected this amount in accrued litigation in the accompanying balance sheet as of September 30, 2017.Item.

There are no other litigation pending or threatened by or against the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the threesix months ended SeptemberJune 30, 2017, we2022, the Company issued the followingno unregistered securities:

During the quarter ended September 30, 2017 we issued an aggregate of 5,320,000 shares of our common stock of which 80,000 shares were issued for $80 in cash and an additional 5,240,000 shares were issued for a combination of $1,250 in cash and $798,750 valued at the closing price on the date of grant for services $5,320 from a previous stock subscription. The issuance were exempt from registration pursuant to section 4(a) (2) of the Securities Act of 1993, due to the fact the investors are sophisticated investors, known to our management and familiar with our operations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSMINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) Not applicable.

(b) Item 407(c)(3) of Regulation S-K:

During the quartersix months covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

ITEM 6. EXHIBITS

(a) Exhibits

SIGNATURES

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.