UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 20222023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-197692
| STAR ALLIANCE INTERNATIONAL CORP. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 37-1757067 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 5743 Corsa Avenue, Suite 218 Westlake Village, CA | 91362 | |
| (Address of principal executive offices) | (Zip Code) |
833-443-7827
(Registrant’s telephone number)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common |
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 ☒
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 | ☒ |
| 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 ☒
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: shares of common stock par value $0.001, were outstanding as at as of December 31, 2022.May 18, 2023.
STAR ALLIANCE INTERNATIONAL CORP.
FORM 10-Q
Quarterly Period Ended DecemberMarch 31, 20222023
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
ItemItem 1. Financial Statements
STAR ALLIANCE INTERNATIONAL CORP.
BALANCE SHEETS
December 31, 2022 | June 30, 2022 | |||||||
| ASSETS | (Unaudited) | (Audited) | ||||||
| Current assets: | ||||||||
| Cash | $ | 2,088 | $ | 71,724 | ||||
| Prepaids and other assets | 400,000 | 547,350 | ||||||
| Prepaid stock for services | – | 1,813,854 | ||||||
| Total current assets | 402,088 | 2,432,928 | ||||||
| Property and equipment | 1,650,000 | 450,000 | ||||||
| Intangible assets | 15,250,000 | – | ||||||
| Mining claims | 57,532 | 57,532 | ||||||
| Total other assets | 16,957,532 | 507,532 | ||||||
| Total Assets | $ | 17,359,620 | $ | 2,940,460 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 65,171 | $ | 52,760 | ||||
| Accrued expenses | 54,425 | 25,961 | ||||||
| Accrued expenses–related party | 6,991 | – | ||||||
| Loan payable – related party | 42,000 | – | ||||||
| Accrued compensation | 309,777 | 212,428 | ||||||
| Notes payable | 5,791,190 | 119,215 | ||||||
| Convertible notes payable, net of discount of $31,249 and $191,248, respectively | 443,751 | 323,752 | ||||||
| Derivative liability | 1,085,990 | 689,231 | ||||||
| Note payable – former related party | 32,000 | 32,000 | ||||||
| Due to former related party | 42,651 | 42,651 | ||||||
| Total current liabilities | 7,873,946 | 1,497,998 | ||||||
| Total Liabilities | 7,873,946 | 1,497,998 | ||||||
| COMMITMENTS AND CONTINGENCIES (see footnotes) | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Preferred stock, $ par value, authorized, none issued and outstanding | – | – | ||||||
| Series A preferred stock, $ par value, authorized, shares issued and outstanding | 1,000 | 1,000 | ||||||
| Series B preferred stock, $ par value, authorized, issued and outstanding | 1,883 | 1,883 | ||||||
| Series C preferred stock, $ par value, shares authorized, and shares issued and outstanding, respectively | 159 | 208 | ||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively | 191,849 | 162,788 | ||||||
| Additional paid-in capital | 23,314,844 | 16,384,983 | ||||||
| Series D preferred stock to be issued | 10,650,000 | – | ||||||
| Stock subscription receivable | (56,250 | ) | (50,000 | ) | ||||
| Accumulated deficit | (24,617,811 | ) | (15,058,400 | ) | ||||
| Total stockholders’ equity (deficit) | 9,485,674 | 1,442,462 | ||||||
| Total liabilities and stockholders’ deficit | $ | 17,359,620 | $ | 2,940,460 | ||||
March 31, 2023 | June 30, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 3,607 | $ | 71,724 | ||||
| Prepaids and other assets | 507,500 | 547,350 | ||||||
| Prepaid stock for services | – | 1,813,854 | ||||||
| Total current assets | 511,107 | 2,432,928 | ||||||
| Property and equipment | 450,000 | 450,000 | ||||||
| Mining claims | 57,532 | 57,532 | ||||||
| Total other assets | 507,532 | 507,532 | ||||||
| Total Assets | $ | 1,018,639 | $ | 2,940,460 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 61,037 | $ | 52,760 | ||||
| Accrued expenses | 73,485 | 25,961 | ||||||
| Accrued expenses–related party | 8,043 | – | ||||||
| Loan payable – related party | 42,000 | – | ||||||
| Accrued compensation | 298,637 | 212,428 | ||||||
| Notes payable | 91,312 | 119,215 | ||||||
| Convertible notes payable, net of discount of $81,753 and $191,248, respectively | 401,803 | 323,752 | ||||||
| Derivative liability | 943,821 | 689,231 | ||||||
| Note payable – former related party | 32,000 | 32,000 | ||||||
| Due to former related party | 42,651 | 42,651 | ||||||
| Total current liabilities | 1,994,789 | 1,497,998 | ||||||
| Total Liabilities | 1,994,789 | 1,497,998 | ||||||
| COMMITMENTS AND CONTINGENCIES (see footnotes) | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Preferred stock, $par value, authorized: | – | – | ||||||
| Series A preferred stock, $ par value, authorized, shares issued and outstanding | 1,000 | 1,000 | ||||||
| Series B preferred stock, $ par value, authorized, issued and outstanding | 1,883 | 1,883 | ||||||
| Series C preferred stock, $ par value, shares authorized, and shares issued and outstanding, respectively | 223 | 208 | ||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively | 209,520 | 162,788 | ||||||
| Additional paid-in capital | 23,869,294 | 16,384,983 | ||||||
| Stock subscription receivable | (56,250 | ) | (50,000 | ) | ||||
| Accumulated deficit | (25,001,820 | ) | (15,058,400 | ) | ||||
| Total stockholders’ equity (deficit) | (976,150 | ) | 1,442,462 | |||||
| Total liabilities and stockholders’ deficit | $ | 1,018,639 | $ | 2,940,460 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | $ | 310,158 | $ | 1,039,338 | $ | 878,602 | $ | 1,048,400 | ||||||||
| General and administrative – related party | – | 1,500 | – | 3,000 | ||||||||||||
| Professional fees | 67,000 | 11,020 | 67,000 | 13,020 | ||||||||||||
| Consulting | 514,718 | 188,362 | 1,094,093 | 188,362 | ||||||||||||
| Director compensation | 197,400 | 30,000 | 4,607,400 | 60,000 | ||||||||||||
| Officer compensation | 45,000 | 45,000 | 1,490,000 | 90,000 | ||||||||||||
| Total operating expenses | 1,134,276 | 1,315,220 | 8,137,095 | 1,402,782 | ||||||||||||
| Loss from operations | (1,134,276 | ) | (1,315,220 | ) | (8,137,095 | ) | (1,402,782 | ) | ||||||||
| Other expense | ||||||||||||||||
| Interest expense | (67,855 | ) | (1,182 | ) | (203,510 | ) | (2,064 | ) | ||||||||
| Loss on conversion of preferred stock | (758,124 | ) | – | (758,124 | ) | – | ||||||||||
| Change in fair value of derivative | (222,477 | ) | – | (460,682 | ) | – | ||||||||||
| Total other expense | (1,048,456 | ) | (1,182 | ) | (1,422,316 | ) | (2,064 | ) | ||||||||
| Loss before provision for income taxes | (2,182,732 | ) | (1,316,402 | ) | (9,559,411 | ) | (1,404,846 | ) | ||||||||
| Provision for income taxes | – | – | – | – | ||||||||||||
| Net loss | $ | (2,182,732 | ) | $ | (1,316,402 | ) | $ | (9,559,411 | ) | $ | (1,404,846 | ) | ||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 3 |
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS (UNAUDITED)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | $ | 80,556 | $ | 189,558 | $ | 959,158 | $ | 1,237,958 | ||||||||
| General and administrative – related party | – | 10,000 | – | 13,000 | ||||||||||||
| Mine development | – | 788,500 | – | 788,500 | ||||||||||||
| Professional fees | 22,130 | 93,500 | 89,130 | 106,520 | ||||||||||||
| Consulting | 16,500 | 3,827,475 | 1,110,593 | 4,015,837 | ||||||||||||
| Director compensation | 60,000 | 1,469,000 | 3,207,400 | 1,529,000 | ||||||||||||
| Officer compensation | 45,000 | 817,500 | 2,995,000 | 907,500 | ||||||||||||
| Total operating expenses | 224,186 | 7,195,533 | 8,361,281 | 8,598,315 | ||||||||||||
| Loss from operations | (224,186 | ) | (7,195,533 | ) | (8,361,281 | ) | (8,598,315 | ) | ||||||||
| Other expense: | ||||||||||||||||
| Interest expense | (56,151 | ) | (6,780 | ) | (259,661 | ) | (8,844 | ) | ||||||||
| Loss on conversion of preferred stock | (152,985 | ) | – | (911,109 | ) | – | ||||||||||
| Loss on conversion of debt | (97,249 | ) | (343,120 | ) | (97,249 | ) | (343,120 | ) | ||||||||
| Change in fair value of derivative | 146,562 | (470,635 | ) | (314,120 | ) | (470,635 | ) | |||||||||
| Total other expense | (159,823 | ) | (820,535 | ) | (1,582,139 | ) | (822,599 | ) | ||||||||
| Loss before provision for income taxes | (384,009 | ) | (8,016,068 | ) | (9,943,420 | ) | (9,420,914 | ) | ||||||||
| Provision for income taxes | – | – | – | – | ||||||||||||
| Net loss | $ | (384,009 | ) | $ | (8,016,068 | $ | (9,943,420 | ) | $ | (9,420,914 | ) | |||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 4 |
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIXNINE MONTHS ENDED DECEMBERMARCH 31, 20222023
(Unaudited)
| Preferred Stock Series A | Preferred Stock Series B | Preferred Stock Series C | ||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
| Balance, June 30, 2022 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | 207,500 | $ | 208 | |||||||||||||||
| Preferred stock sold for cash | — | — | — | — | 46,500 | 47 | ||||||||||||||||||
| Stock sold for cash | — | — | — | — | — | — | ||||||||||||||||||
| Stock issued for services – related party | — | — | — | — | — | — | ||||||||||||||||||
| Net loss | — | — | — | — | — | — | ||||||||||||||||||
| Balance, September 30, 2022 | 1,000,000 | 1,000 | 1,833,000 | 1,883 | 254,000 | 255 | ||||||||||||||||||
| Preferred stock sold for cash | — | — | — | — | 57,750 | 58 | ||||||||||||||||||
| Preferred stock converted to common stock | — | — | — | — | (153,750 | ) | (154 | ) | ||||||||||||||||
| Stock issued for conversion of debt | — | — | — | — | — | — | ||||||||||||||||||
| Stock issued for services – related party | — | — | — | — | — | — | ||||||||||||||||||
| Stock issued for services | — | — | — | — | — | — | ||||||||||||||||||
| Preferred stock issued for asset acquisitions | — | — | — | — | — | — | ||||||||||||||||||
| Net loss | — | — | — | — | — | — | ||||||||||||||||||
| Balance, December 31, 2022 | 1,000,000 | 1,000 | 1,833,000 | 1,883 | 158,000 | 159 | ||||||||||||||||||
| Preferred stock sold for cash | — | — | — | — | 163,950 | 164 | ||||||||||||||||||
| Preferred stock converted to common stock | — | — | — | — | (100,250 | ) | (100 | ) | ||||||||||||||||
| Stock issued for conversion of debt | — | — | — | — | — | — | ||||||||||||||||||
| Stock issued for services | — | — | — | — | — | — | ||||||||||||||||||
| Warrants issued | — | — | — | — | — | — | ||||||||||||||||||
| Preferred dividends | — | — | — | — | — | — | ||||||||||||||||||
| Net loss | — | — | — | — | — | — | ||||||||||||||||||
| Balance, March 31, 2023 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | 221,700 | $ | 223 | |||||||||||||||
Preferred Stock Series A | Preferred Stock Series B | Preferred Stock Series C | Common Stock | Additional Paid-in | Stock Subscription | Preferred Stock To Be | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Issued | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | 207,500 | $ | 208 | 162,788,028 | $ | 162,788 | $ | 16,384,983 | $ | (50,000 | ) | $ | – | $ | (15,058,400 | ) | $ | 1,442,462 | ||||||||||||||||||||||||||||
| Preferred stock sold for cash | – | – | – | – | 46,500 | 47 | – | – | 46,453 | – | – | – | 46,500 | |||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | – | – | – | – | 50,000 | 50 | 6,200 | (6,250 | ) | – | – | – | ||||||||||||||||||||||||||||||||||||||
| Stock issued for services – related party | – | – | – | – | – | – | 20,000,000 | 20,000 | 5,730,000 | – | – | – | 5,750,000 | |||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | – | – | (7,376,679 | ) | (7,376,679 | ) | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | 1,000,000 | 1,000 | 1,833,000 | $ | 1,883 | 254,000 | 255 | 182,838,028 | 182,838 | 22,167,636 | (56,250 | ) | – | (22,435,079 | ) | (137,717 | ) | |||||||||||||||||||||||||||||||||||
| Preferred stock sold for cash | – | – | – | – | 57,750 | 58 | – | – | 50,692 | – | – | – | 50,750 | |||||||||||||||||||||||||||||||||||||||
| Preferred stock converted to common stock | – | – | – | – | (153,750 | ) | (154 | ) | 4,447,871 | 4,448 | 762,251 | – | – | – | 766,545 | |||||||||||||||||||||||||||||||||||||
| Stock issued for conversion of debt | – | – | – | – | – | – | 1,538,461 | 1,538 | 102,385 | – | – | – | 103,923 | |||||||||||||||||||||||||||||||||||||||
| Stock issued for services – related party | – | – | – | – | – | – | 1,000,000 | 1,000 | 164,000 | – | – | – | 165,000 | |||||||||||||||||||||||||||||||||||||||
| Stock issued for services | – | – | – | – | – | – | 2,025,000 | 2,025 | 67,880 | – | – | – | 69,905 | |||||||||||||||||||||||||||||||||||||||
| Preferred stock issued for asset acquisitions | – | – | – | – | – | – | – | – | – | 10,650,000 | – | 10,650,000 | ||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | – | – | (2,182,732 | ) | (2,182,732 | ) | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | 158,000 | $ | 159 | 191,849,360 | $ | 191,849 | $ | 23,314,844 | $ | (56,250 | ) | $ | 10,650,000 | $ | (24,617,811 | ) | $ | 9,485,674 | ||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in | Stock Subscription | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Receivable | Deficit | Total | |||||||||||||||||||
| Balance, June 30, 2022 | 162,788,028 | $ | 162,788 | $ | 16,384,983 | – | $ | (50,000 | ) | $ | (15,058,400 | ) | $ | 1,442,462 | ) | |||||||||
| Preferred stock sold for cash | – | – | 46,453 | – | – | 46,500 | ||||||||||||||||||
| Stock sold for cash | 50,000 | 50 | 6,200 | (6,250 | ) | – | – | |||||||||||||||||
| Stock issued for services – related party | 20,000,000 | 20,000 | 5,730,000 | – | – | 5,750,000 | ||||||||||||||||||
| Net loss | – | – | – | – | – | (7,376,679 | ) | (7,376,679 | ) | |||||||||||||||
| Balance, September 30, 2022 | 182,838,028 | 182,838 | 22,167,636 | – | (56,250 | ) | (22,435,079 | ) | (137,717 | ) | ||||||||||||||
| Preferred stock sold for cash | – | – | 50,692 | – | – | 50,750 | ||||||||||||||||||
| Preferred stock converted to common stock | 4,447,871 | 4,448 | 762,251 | – | – | 766,545 | ||||||||||||||||||
| Stock issued for conversion of debt | 1,538,461 | 1,538 | 102,385 | – | – | 103,923 | ||||||||||||||||||
| Stock issued for services – related party | 1,000,000 | 1,000 | 164,000 | – | – | 165,000 | ||||||||||||||||||
| Stock issued for services | 2,025,000 | 2,025 | 67,880 | – | – | 69,905 | ||||||||||||||||||
| Preferred stock issued for asset acquisitions | – | – | – | – | 400,000 | |||||||||||||||||||
| Net loss | – | – | – | – | – | (2,182,732 | ) | (2,182,732 | ) | |||||||||||||||
| Balance, December 31, 2022 | 191,849,360 | 191,849 | 23,314,844 | – | (56,250 | ) | (24,617,811 | ) | (764,326 | ) | ||||||||||||||
| Preferred stock sold for cash | – | – | 163,786 | – | – | 163,950 | ||||||||||||||||||
| Preferred stock converted to common stock | 9,157,912 | 9,159 | 143,927 | – | – | 152,986 | ||||||||||||||||||
| Stock issued for conversion of debt | 7,512,157 | 7,512 | 221,020 | – | – | 228,532 | ||||||||||||||||||
| Stock issued for services | 1,000,000 | 1,000 | 15,000 | – | – | 16,000 | ||||||||||||||||||
| Warrants issued | – | – | 24,092 | – | – | 24,092 | ||||||||||||||||||
| Preferred dividends | – | – | (13,375 | ) | – | – | (13,375 | ) | ||||||||||||||||
| Net loss | – | – | – | – | – | (384,009 | ) | (384,009 | ) | |||||||||||||||
| Balance, March 31, 2023 | 209,519,429 | $ | 209,520 | $ | 23,869,294 | – | $ | (56,250 | ) | $ | (25,001,820 | ) | $ | (976,150 | ) | |||||||||
| 5 |
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIXNINE MONTHS ENDED DECEMBERMARCH 31, 20212022
(Unaudited)
Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid-in | Common Stock To Be | Stock Subscription | Accumulated | Preferred Stock Series A | Preferred Stock Series B | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Issued | Receivable | Deficit | Total | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | 124,319,584 | $ | 124,320 | $ | 2,793,609 | $ | 41,633 | $ | (20,000 | ) | $ | (3,172,791 | ) | $ | (230,346 | ) | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | – | - | 124,319,584 | $ | 124,320 | ||||||||||||||||||||||||||||||||||
| Stock issued for services | – | – | – | – | 4,444 | 4 | 19,996 | – | – | – | 20,000 | – | – | – | – | 4,444 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | – | – | 10,790,000 | 10,790 | 574,210 | (35,000 | ) | (550,000 | ) | – | – | – | – | – | – | 10,790,000 | 10,790 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | (88,444 | ) | (88,444 | ) | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | 1,000,000 | 1,000 | 1,833,000 | 1,883 | 135,114,028 | 135,114 | 3,387,815 | 6,633 | (570,000 | ) | (3,261,235 | ) | (298,790 | ) | 1,000,000 | 1,000 | 1,833,000 | 1,883 | – | - | 135,114,028 | 135,114 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | – | – | 300,000 | 300 | 29,700 | 19,000 | (10,000 | ) | – | 39,000 | – | – | – | – | 300,000 | 300 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash not collectible | – | – | – | – | – | – | (520,000 | ) | – | 520,000 | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for services | – | – | – | – | 2,562,000 | 2,562 | 3,951,738 | 2,000,000 | – | – | 5,954,300 | – | – | – | – | 2,562,000 | 2,562 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | (1,316,402 | ) | (1,316,402 | ) | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | 137,976,029 | $ | 137,976 | $ | 6,849,253 | $ | 2,025,633 | $ | (60,000 | ) | $ | (4,577,637 | ) | $ | 4,378,108 | 1,000,000 | 1,000 | 1,833,000 | 1,883 | – | - | 137,976,029 | 137,976 | ||||||||||||||||||||||||||||||||||||||
| Stock sold for cash | – | – | – | – | 10,565,000 | 10,565 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for services | – | – | – | – | 8,100,000 | 8,100 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for debt | – | – | – | – | 672,000 | 672 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for investment | – | – | – | – | 200,000 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | 1,000,000 | $ | 1,000 | 1,833,000 | $ | 1,883 | – | - | 157,513,029 | $ | 157,513 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional Paid-in | Common Stock To Be | Stock Subscription | Accumulated | |||||||||||||||||
| Capital | Issued | Receivable | Deficit | Total | ||||||||||||||||
| Balance, June 30, 2021 | $ | 2,793,609 | $ | 41,633 | $ | (20,000 | ) | $ | (3,172,791 | ) | $ | (230,346 | ) | |||||||
| Stock issued for services | 19,996 | — | — | — | 20,000 | |||||||||||||||
| Stock sold for cash | 574,210 | (35,000 | ) | (550,000 | ) | — | — | |||||||||||||
| Net loss | — | — | — | (88,444 | ) | (88,444 | ) | |||||||||||||
| Balance, September 30, 2021 | 3,387,815 | 6,633 | (570,000 | ) | (3,261,235 | ) | (298,790 | ) | ||||||||||||
| Stock sold for cash | 29,700 | 19,000 | (10,000 | ) | — | 39,000 | ||||||||||||||
| Cash not collectible | (520,000 | ) | — | 520,000 | — | — | ||||||||||||||
| Stock issued for services | 3,951,738 | 2,000,000 | — | — | 5,954,300 | |||||||||||||||
| Net loss | — | — | — | (1,316,402 | ) | (1,316,402 | ) | |||||||||||||
| Balance, December 31, 2021 | 6,849,253 | 2,025,633 | (60,000 | ) | (4,577,637 | ) | 4,378,108 | |||||||||||||
| Stock sold for cash | 1,150,435 | (22,633 | ) | (100,000 | ) | — | 1,038,367 | |||||||||||||
| Stock issued for services | 6,414,600 | (2,003,000 | ) | — | — | 4,419,700 | ||||||||||||||
| Stock issued for debt | 394,628 | — | — | — | 395,300 | |||||||||||||||
| Stock issued for investment | 299,800 | — | — | — | 300,000 | |||||||||||||||
| Net loss | — | — | — | (8,016,068 | ) | (8,016,068 | ) | |||||||||||||
| Balance, March 31, 2022 | $ | 15,108,716 | $ | — | $ | (160,000 | ) | $ | (12,593,705 | ) | $ | 2,515,407 | ||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 6 |
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (9,943,420 | ) | $ | (9,420,914 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Prepaid stock issued for services | 1,813,853 | – | ||||||
| Common stock issued for services - related party | 5,915,000 | – | ||||||
| Common stock issued for services | 85,905 | 7,495,770 | ||||||
| Change in fair value of derivative | 314,120 | 470,635 | ||||||
| Debt discount amortization | 208,050 | 5,698 | ||||||
| Loss on conversion of debt | 97,249 | 343,120 | ||||||
| Loss on conversion of preferred stock | 911,109 | – | ||||||
| Changes in assets and liabilities: | ||||||||
| Prepaids and other assets | 39,850 | (364,061 | ) | |||||
| Accounts payable | 8,277 | (6,795 | ) | |||||
| Accrued expenses | 49,985 | 13,640 | ||||||
| Accrued expenses – related party | 8,043 | – | ||||||
| Accrued compensation | 86,209 | 38,036 | ||||||
| Net cash used in operating activities | (405,769 | ) | (1,424,871 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | – | – | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds of borrowings from a related party | 42,000 | 6,344 | ||||||
| Proceeds from the sale of common stock | – | 1,084,000 | ||||||
| Proceeds from convertible notes payable | 77,355 | 400,000 | ||||||
| Repayment of convertible note payable | (15,000 | ) | – | |||||
| Proceeds from the sale of preferred stock | 261,200 | – | ||||||
| Proceeds from notes payable | – | 118,971 | ||||||
| Payment on notes payable | (27,903 | ) | (20,000 | ) | ||||
| Net cash provided by financing activities | 337,652 | 1,589,315 | ||||||
| Net change in cash | (68,117 | ) | 164,444 | |||||
| Cash at the beginning of period | 71,724 | 6,789 | ||||||
| Cash at the end of period | $ | 3,607 | $ | 171,233 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | – | $ | – | ||||
| Income taxes paid | $ | – | $ | – | ||||
| NON-CASH TRANSACTIONS: | ||||||||
| Common stock issued for prepaid services | $ | 1,813,854 | $ | 4,755,104 | ||||
| Common stock issued for investment | $ | – | $ | 300,000 | ||||
| Common stock issued for conversion of debt | $ | – | $ | 395,300 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (9,559,411 | ) | $ | (1,404,846 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Prepaid stock issued for services | 1,813,853 | – | ||||||
| Common stock issued for services - related party | 5,915,000 | – | ||||||
| Common stock issued for services | 69,905 | 1,219,196 | ||||||
| Change in fair value of derivative | 460,682 | – | ||||||
| Debt discount amortization | 159,999 | – | ||||||
| Loss on conversion of preferred stock | 758,124 | – | ||||||
| Changes in assets and liabilities: | ||||||||
| Prepaids and other assets | 47,350 | – | ||||||
| Accounts payable | 12,411 | 5,370 | ||||||
| Accrued expenses | 36,886 | 7,964 | ||||||
| Accrued expenses – related party | 6,991 | – | ||||||
| Accrued compensation | 97,349 | 132,270 | ||||||
| Net cash used in operating activities | (180,861 | ) | (40,046 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | – | – | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds of borrowings from a related party | 42,000 | 24,550 | ||||||
| Proceeds from the sale of common stock | – | 39,000 | ||||||
| Proceeds from the sale of preferred stock | 97,250 | – | ||||||
| Payment on notes payable | (28,025 | ) | (20,000 | ) | ||||
| Net cash provided by financing activities | 111,225 | 43,550 | ||||||
| Net change in cash | (69,636 | ) | 3,504 | |||||
| Cash at the beginning of period | 71,724 | 6,789 | ||||||
| Cash at the end of period | $ | 2,088 | $ | 10,293 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | – | $ | – | ||||
| Income taxes paid | $ | – | $ | – | ||||
| NON-CASH TRANSACTIONS: | ||||||||
| Common stock issued for prepaid services | $ | – | $ | 4,755,104 | ||||
| Series D preferred stock issued for asset acquisitions | $ | 10,650,000 | $ | – | ||||
The accompanying notes are an integral part of these unaudited financial statements.
| 7 |
STAR ALLIANCE INTERNATIONAL CORP.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBERMARCH 31, 20222023
NOTE 1 –NATURE OF BUSINESS
Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada, for the purpose of acquiring and developing gold mining as well as certain other mining properties worldwide and environmentally safe technologies both in mining and other business areas.worldwide.
NOTE 2 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Presentation
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of operations for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Form 10-K for the fiscal year ended June 30, 2022, have been omitted.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
| 8 |
The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of DecemberMarch 31, 2022: 2023:
| Schedule Of Fair Value, Liabilities Measured on Recurring Basis | ||||||||||||||||||||||||
| At December 31, 2022 | ||||||||||||||||||||||||
| At March 31, 2023 | ||||||||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
| Derivative | $ | – | $ | – | $ | 1,085,990 | $ | – | $ | – | $ | 943,821 | ||||||||||||
| Total | $ | – | $ | – | $ | 1,085,990 | $ | – | $ | – | $ | 943,821 | ||||||||||||
| At June 30, 2022 | ||||||||||||
| Description | Level 1 | Level 2 | Level 3 | |||||||||
| Derivative | $ | – | $ | – | $ | 689,231 | ||||||
| Total | $ | – | $ | – | $ | 689,231 | ||||||
NOTE 3 – GOING CONCERN
The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying unaudited financial statements, the Company has an accumulated deficit of $24,617,81125,001,820 as of DecemberMarch 31, 2022.2023. For the sixnine months ended DecemberMarch 31, 2022,2023, the Company had a net loss of $9,559,4119,943,420, which did include $9,177,5639,345,287 of non-cash expense incurred for the issuance of common stock for services, loss on conversion of preferred stock and derivatives associated with convertible debt. We used $180,861405,769 of cash in operating activities. Due to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern.
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 4 –ACQUISITIONS
On December 15, 2021,January 1, 2022, the Company signed a definitive agreement to purchaseacquired 51% of the capital stock of Compania Minera Metalurgica Centro Americana SA. (“Commsa”(Commsa), a Honduran Corporation, pursuant to the share exchange agreement dated December 15, 2021 between the Company and Commsa’s sole shareholder, Juan Lemus (the “Share Exchange Agreement”), in consideration for $1,000,000 in cash and the issuance of 5,000,000 in restricted shares of the Company’s common stock.stock to Mr. Lemus. In addition, the Company has agreed to provide up to $7,500,000 working capital to expand the mining operations in a gold mining project (Rio Jalan Project) in Olancho state in the highlands of Central Honduras. This transaction has become effective asAs the result of January 1, 2022.
This project,this acquisition, the Company now owns the mining rights to five operating mines that runsrun along a 12.5 mile12.5-mile stretch of the Rio Jalan River is a peaceful agrarian area, with only farmers and ranchers in the nearby five villages.
The environmental licenses have been obtained and exploration is ongoing. The mines will be producing gold early in 2022 and will be expanded early next year. Local small mining operationsthat are producing a minimum of 250 to 300 oz of gold per site per month while losing approximately 50%being prepared for production. As of the recoverable gold particles. Our expanded operations, using modern equipment and our new Genesis program, should result in up to a 98% rate of recoverable gold, leading to significantly higher quantities of gold per site.
As an important partdate of this transaction, STAR has agreed to continuereport, the distribution of aid toCompany is not in compliance with its obligations under the five local villages with 2% of mining profits per village to be used for expanded school facilities, a medical center, college scholarships and a community center to be used by adults and kids alike. Additional projects, beneficial to the community, may be considered in the future.
Gold resources are in excess of 1 million oz. This estimate came from a limited appraisal of the area in which the mines are located. This acquisition become effective in January, 2022. The Company hasShare Exchange Agreement, since it issued to dateMr. Lemus only shares of Common stockStock of the Company and paid $75,000 towards the purchase price.toward $1,000,000 cash payment.
On May 9, 2022, a binding letter of intent was signed for the acquisition of 51% of NSM USA a Wyoming corporation that owns 100% of four lithium mines in West Africa. The cost of these mines is $2 million, most of which iswas to be used for the growth of the four mines. These mines that are already producing small amounts of Lithium will be greatly expanded with the purchase of equipment. This transaction iswas due to close early 2023 withand full production was expected to start in the second quarter of 2023. This transaction was cancelled on March 10, 2023, due to insufficient ability to complete the due diligence and the lack of necessary funding for the project
| 9 |
On May 11, 2022, a binding letter of intent was signed for the acquisition of 51% of NGM USA a Wyoming corporation that owns 100% of three gold mines in West Africa. The cost of this acquisition is $2 million, most of which will be used for equipment and growth of the mines. This transaction iswas due to close early 2023. All exploration work has been completed and production iswas anticipated to start in the second quarter of 2023.
On May 23, 2022, a binding letter This transaction was cancelled on March 10, 2023, due to insufficient ability to complete the due diligence and the lack of intent was signedfunding for the acquisition of 75% of Magma International Inc. (“MII”). This acquisition for stock and cash will result in MII owning the Intellectual property, Building, equipment and significant inventory as well as the know how to produce Barotex. Mr. Lilo Benzicron the original inventor of this product will join MII as CEO and will be driving the innovation of new products for MII.
On December 17, 2022, Star has completed the purchase of the Barotex™ patent, trade mark, equipment and inventory. The operations will be run through a new subsidiary Magma International, Inc. Star has an option to purchase the 76,000 square foot building, that is the Barotex manufacturing plant. The patent is for a fiber known as “Barotex”. Barotex is manufactured from igneous rock, is seven times stronger than steel and stronger than wood, aluminum, fiber glass, carbon fiber and Kevlar. It weighs 50% less than fiber glass and is impervious to chemicals and seawater and does not rust. It can be used in multiple industries including building materials replacing steel beams, rebar, metal mesh drywall and wood joists. It offers more protection on armored vehicles, flak jackets etc. than more traditional materials like steel, Kevlar and other materials. Our fibers reduce pollution when replacing steel, aluminum, fiberglass, Kevlar and carbon fiber while saving rainforests when used in place of wood. Our fibers do not burn and will melt (like wax) at temperatures 1200 Fahrenheit and above. It will not burn.
The purchase price for the Patents, trade mark and know how is $10 million. The purchase was made up of the following:
$100,000 already paid
$50,000 to be paid by January 30, 2023
$4,850,000 to be paid in annual payments. $500,000 to be paid by June 30, 2023 and $750,000 thereafter due by June 30 in each year ended June 30 with the final payment of $600,000 due by June 30, 2029.
of Series D preferred stock that converts to four (4) shares of common stock of the Company issued to the Mepe Trust.
Series D preferred stock that converts to four (4) shares of common stock of the Company issued to Klara Benzicron
Series D preferred shares that convert to four ($) shares of common stock issued to Lilo Benzicron.
Twenty five percent (25%) of the issued share capital of Magma International, Inc.
In addition, Lilo Benzicron will receive a royalty on sales annually of 2% of gross sales up to $50 million, 1.5% of the next $50 million gross sales and 1% thereafter.
The purchase price for the equipment and inventory was $1.2 million. The purchase was made up as follows:
$50,000 no later than January 15, 2023. This amount has not been paid as yet.
$350,000 no later than March 20, 2023
$400,000 due and payable no later than December 17, 2023.
1,500,000 shares of common stock to be issued as security for the $350,000 payment. If Star makes the payment timely, these shares will be returned to treasury.
shares of series D preferred shares that convert to four (4) shares of common stock.project.
NOTE 5 –On March 19, 2023, the Company entered into and executed a share purchase agreement (the “Share Purchase Agreement”) with Lions Works Advertising, SA, a Guatemalan corporation (“Lion Works”) and Juan Lemus, the sole shareholder of Lion Works, pursuant to which it acquired from Mr. Lemus
Intangible assets, net, consist% of the following:
| Schedule of intangible assets | ||||
| December 31, 2022 | ||||
| Intellectual Property | $ | 15,250,000 | ||
Once operations utilizingcapital stock of Lion Works, including % of the intellectual property have begun,rights and know-how related to the Genesis extraction system (“Genesis”), The Share Purchase Agreement superseded the terms of the binding Letter of Intent that the parties entered into and executed by the parties on November 21, 2021. Pursuant to the terms of the Share Purchase Agreement, Genesis will be managed by a new company, in which the Company will begin amortizationown % interest, with the remaining % interest to be owned by Juan Lemus. The Company’s title and rights to Genesis are subject to the satisfaction of the asset. following obligations:
| · | The Company shall pay the total purchase price of $ in cash, with the first minimum payment in the amount of $ to be paid by September 30, 2023, and the remaining outstanding balance of $ to be paid by September 30, 2024, within 12 months of the first payment. | |
| · | The Company will invest an additional as a working capital toward development of the Genesis plants, with $ to be paid by July 31, 2023 and the remaining $ to be paid by July 31, 2024, within 12 months of the first payment. | |
| · | The Company will engage a patent attorney and pay for the cost of that patent attorney to prepare the patent application related to Genesis and to register that patent, provided that Lion Works will engage an expert to prepare a report on the Genesis system, to be used in this patent application. for the acquisition of Genesis |
To secure the Company’s obligations under the Share Purchase Agreement, Juan Lemus placed the lien on the Company’s 51% ownership in Lion Works, and, upon formation of a new company, that lien will be placed on the Company’s ownership in that newly formed subsidiary. Such lien shall continue until the Company has recordedperforms all its obligations under the full valueShare Purchase Agreement, which subjects the Company to the risk of losing its title to Genesis in the acquisition as intangible assets. The Company is currently assessing if any further breakdownevent of assets is necessary.breach of its obligations set forth in the Share Purchase Agreement.
NOTE 65 – PROPERTY AND EQUIPMENT
Long lived assets, including property and equipment assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Property and equipment are first recorded at cost. Depreciation and is computed using the straight-line method over the estimated useful lives of the various classes of assets.
Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
| 10 |
Assets stated at cost, less accumulated depreciation consisted of the following:
| Schedule of property, plant and equipment | ||||||||||||||||
| December 31 2022 | June 30, 2022 | March 31 2023 | June 30, 2022 | |||||||||||||
| Mine Assets | $ | 450,000 | $ | 450,000 | $ | 450,000 | $ | 450,000 | ||||||||
| Property & Equipment: Barotex Equipment | 1,200,000 | – | ||||||||||||||
| Total | $ | 1,650,000 | $ | 450,000 | $ | 450,000 | $ | 450,000 | ||||||||
Once operations utilizing the property and equipment have begun, the Company will begin depreciation of the assets.
NOTE 76 – RELATED PARTY TRANSACTIONS
On January 1, 2021, the Company amended employment agreements for Richard Carey and Anthony Anish, were updatedwhich increased their base annual salary for Mr. Carey from $120,000 to include salaries of $180,000 and for Mr. Anish from $60,000 to $120,000 per annum respectively. As
On March 14, 2023, the Company renewed the employment agreements with Mr. Carey and Mr. Anish (the “New Employment Agreements”), stating that the effective date of the New Employment Agreement is August 1, 2022 and that they have a term of 36 months, the same as the terms of the initial employment agreements. The new employment agreements, except for the compensation provisions, contain the same provisions as the initial employment agreement for each executive.
Under the terms of the New Employment Agreement, Mr. Carey is entitled to receive the following compensation:
| · | For the period from August 1, 2022 to December 31, 2022, Mr. Carey received a base salary equal to $180,000; | |
| · | For the period from January 1, 2023 to July 31, 2024, Mr. Carey will receive a base salary equal to $240,000; and | |
| · | For the period from August 1, 2024 to July 31, 2025, Mr. Carey will receive a base salary equal to $270,000. In addition, Mr. Carey is entitled to receive equity compensation, as to be determined by the Board of Directors of the Company. |
Under the terms of the New Employment Agreement, Mr. Anish is entitled to receive s the following compensation:
| · | For the period from August 1, 2022 to December 31, 2022, Mr. Anish received a base salary equal to $120,000; | |
| · | For the period from January 1, 2023 to July 31, 2024, Mr. Anish will receive a base salary equal to $180,000; and | |
| · | For the period from August 1, 2024 to July 31, 2025, Mr. Anish will receive a base salary equal to $210,000. In addition, Mr. Anish is entitled to receive equity compensation, as to be determined by the Board of Directors of the Company. |
As of March 31, 2023, the Company has accrued compensation due to Mr. Carey of $113,34986,263 and Mr. Anish of $136,428152,375. As of June 30, 2022, the Company has accrued compensation due to Mr. Carey of $52,600and Mr. Anish of $99,828. In addition, the Company has accrued salary to Mr. Baird (a former officer) of $60,000. Mr. Baird resigned his position on August 12, 2020.
Mr. Carey is using his personal office space at no cost to the Company.
| 11 |
On August 15, 2022, the Company issued shares of common stock to Fernando Godina, a Director, for services. The shares were valued at $ per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.
On August 15, 2022, the Company issued shares of common stock to Bryan Cappelli, Director, for services. The shares were valued at $ per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.
On August 15, 2022, the Company issued shares of common stock to Weverson Correia, CEO and Director, for services.his services as the CEO. The shares were valued at $ per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.
On August 15, 2022, the Company issued shares of common stock to Anthony Anish, CFO and director, for services.services as CFO. The shares were valued at $ per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.
On November 17, 2022, Our Chairman, Mr. Carey sold of his own shares of common stock in exchange for $42,000 which was loaned to the Company. The loan to the Company is non-interest bearing and due on demand.
On December 5, 2022, the Company issued shares of common stock to Themis Glatman,Caldwell, Director, for services. The shares were valued at $ per share, the closing stock price on the date of grant, for total non-cash expense of $165,000.
NOTE 87 – NOTES PAYABLE
As of DecemberMarch 31, 20222023 and June 30, 2022, the Company owed Kok Chee Lee, the former CEO and Director of the Company, $42,651 and $42,651, respectively for operating expenses he paid on behalf of the Company during the year ended June 30, 2018. The borrowing is unsecured, non-interest-bearing and due on demand.
On June 1, 2018, the Company executed a promissory note in the amount of $32,000 with the former Secretary of the Board for $30,128 of accrued expenses for services previously provided and an additional $1,872 for services rendered. The note is unsecured, bears interest at 5% per annum and matures on December 1, 2018. As of DecemberMarch 31, 20222023 and June 30, 2022, there is $7,3627,762 and $6,562, respectively, of accrued interest due on the note. The note is past due and in default.
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As of DecemberMarch 31, 20222023 and June 30, 2022, the Company owes various other individuals and entities $98,69077,400 and $119,215, respectively. All the loans are non-interest bearing and due on demand.
NOTE 98 - CONVERTIBLE NOTES
On March 28, 2022, we received short term financing from a private investor under a 10% Fixed Convertible Secured Promissory Note in the principal amount of $400,000 (the “Note”). The Note bears interest at a fixed rate of 10%10% per annum with all principal and interest due at maturity on July 31, 2022. The Note is secured by a security interest and lien on all equipment located at our Troy mine in Mariposa County, California. At the option of the investor, and at any time prior to the maturity date, the principal and interest owing under the Note may be converted into shares of our common stock at a conversion price equal to 50% of the lowest closing market price for our common stock during the five trading days preceding the conversion.
On June 8, 2022, the Company executed a 10% convertible promissory note with Fast Capital LLC (“Fast Capital”). The note is convertible at a price per share equal to the 65% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days up to the date on which lender elects to convert all or part of the Note.
On February 7, 2023, the Company executed a 12% convertible promissory note with Quick Capital LLC (“Quick Capital”). The note is convertible at the lessor of 1) $0.05, or a price per share equal to the 65% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days prior to the date on which lender elects to convert all or part of the Note. In addition the Company issued Quick Capital warrants to purchase up to 1,211,111 shares of common stock. The Warrants are exercisable for shares of the Company’s common stock at a price of $0.05 per share and expire 5 five years from the date of issuance.
On February 8, 2023, the Company executed a 10% convertible promissory note with AES Capital Management, LLC (“AES”). The note is convertible at the lessor of 1) $0.02, or a price per share equal to the 65% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days prior to the date on which lender elects to convert all or part of the Note.
The following table summarizes the convertible notes outstanding as of March 31, 2023:
| Schedule of convertible notes | ||||||||||||||||||||||||
| Note Holder | Date | Maturity Date | Interest | Balance June 30, 2022 | Additions | Payments / Conversions | Balance March 31, 2023 | |||||||||||||||||
| Private investor | 3/28/2022 | 7/31/2022 | 14% | $ | 400,000 | $ | – | $ | (15,000 | ) | $ | 385,000 | ||||||||||||
| Fast Capital LLC | 6/8/2022 | 6/8/2023 | 10% | 115,000 | – | (115,000 | ) | – | ||||||||||||||||
| Quick Capital LLC | 2/7/2023 | 11/8/2023 | 12% | – | 60,556 | – | 60,556 | |||||||||||||||||
| AES Capital Management, LLC | 2/8/2023 | 2/7/2024 | 10% | – | 38,000 | – | 38,000 | |||||||||||||||||
| Total | $ | 515,000 | $ | 98,556 | $ | (130,000 | ) | $ | 483,556 | |||||||||||||||
| Less debt discount | $ | (191,248 | ) | $ | (81,753 | ) | ||||||||||||||||||
| Convertible notes payable, net | $ | 323,752 | $ | 401,803 | ||||||||||||||||||||
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A summary of the activity of the derivative liability for the notes above is as follows:
| Schedule of derivative liabilities | ||||||||
| Balance at June 30, 2021 | $ | – | $ | – | ||||
| Increase to derivative due to new issuances | 552,517 | 552,517 | ||||||
| Derivative loss due to mark to market adjustment | 136,714 | 136,714 | ||||||
| Balance at June 30, 2022 | 689,231 | 689,231 | ||||||
| Increase to derivative due to new issuances | 150,512 | |||||||
| Decrease to derivative due to conversion | (63,923 | ) | (210,042 | ) | ||||
| Derivative loss due to mark to market adjustment | 460,682 | 314,120 | ||||||
| Balance at December 31, 2022 | $ | 1,085,990 | ||||||
| Balance at March 31, 2023 | $ | 943,821 | ||||||
A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of DecemberMarch 31, 2022,2023, is as follows:
| Schedule of fair value assumptions | ||||||||
| Inputs | December 31, 2022 | Initial Valuation | ||||||
| Stock price | $ | $ | ||||||
| Conversion price | $ | .014 - .019 | $ | .03 - .2995 | ||||
| Volatility (annual) | 139.62% - 212.41% | 256.36% - 381.28% | ||||||
| Risk-free rate | 4.42% – 4.69% | 0.59% - 2.29% | ||||||
| Dividend rate | – | – | ||||||
| Years to maturity | 0 - .44 | .34 - 1 | ||||||
| Schedule of fair value assumptions | ||||||||
| Inputs | March 31, 2023 | Initial Valuation | ||||||
| Stock price | $ | $ | ||||||
| Conversion price | $ | 0.0066 - 0.0086 | $ | 0.015 - 0.2995 | ||||
| Volatility (annual) | 184.54% - 299.51% | 299.13% - 381.28% | ||||||
| Risk-free rate | 4.74% – 4.93% | 0.59% - 4.93% | ||||||
| Dividend rate | – | – | ||||||
| Years to maturity | 0 - .86 | .34 - 1 | ||||||
NOTE 109 – PREFERRED STOCK
Of the shares of the Company's authorized Preferred Stock, $ (Series A and B) and $1.00 (Series C) par value per share, are designated Series A preferred stock, shares are designated as Series B Preferred Stock and shares are designated Series C preferred stock.
Series A Preferred Stock
Each Share of Series A preferred stock shall havehas 500 votes per share and each share can be converted into 500 shares of common stock. The holders of the Series A preferred stock are not entitled to dividends.
On July 2, 2020, the Board granted all shares of the Series A preferred stock to the Company’s Chairman and CEO, Richard Carey, in conversion of $ of accrued compensation.
Series B Preferred Stock
Only one person or entity, is entitled to be designated as the owner of all of the Series B Preferred Stock (the “Holder”), in whose name the initial certificates representing the Series B Preferred Stock shall be issued. Any transfer of the Series B Preferred Stock to a different Holder must be approved in advance by the Corporation; provided, however, the Holder shall have the right to transfer the Series B Preferred Stock, or any portion thereof, to any affiliate of Holder or nominee of Holder, without the approval of the Corporation. Each share of Preferred Stock shall havehas one vote per share. Holder is not entitled to dividends or distributions and each share of Series B Preferred Stock shall be convertible at the rate of two Common Shares for each one B Preferred stock.
In conjunction with the APA with Troy, the company issued shares of Series B Preferred Stock, the shares were valued at $0.002 or $7,532 as if they had been converted into 3,666,000 shares of common stock.
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On October 9, 2019, the parties have agreed to extend the date for filing the registration statement relating to the preferred shares of the Company to be issued to the Troy shareholders and that would in turn extend the date that the shares would become free trading. This extension will be for 150 days for filing the registration statement and obtaining approval for the shares to become free trading. All the remaining terms included in the contract will remain the same.
Series C Preferred Stock
On March 30, 2022, the Company created and designated shares of Series C Preferred Stock (“Series C”) with a stated value of $. The Series C has an annual cumulative dividend of 8% and, has no voting rights. The Series C is convertible into shares of common stock at 65% of the lowest trading price for the ten days prior to the conversion date.
During the sixnine months ended DecemberMarch 31, 2022,2023, the Company sold shares of Series C to Geneva Roth Remark Holdings Inc for total proceeds of $104,250268,200.
During the sixnine months ended DecemberMarch 31, 2022,2023, Geneva Roth converted shares of Series C preferred stock into shares of common stock. The Company recognized a loss on conversion of $758,124911,109.
NOTE 1110 – COMMON STOCK
During the sixnine months ended DecemberMarch 31, 2022,2023, the Company sold shares of common stock for total cash proceeds of $6,250. The funds have not been received as of DecemberMarch 31, 2022.2023.
During the sixnine months ended DecemberMarch 31, 2022,2023, Fast Capital converted $40,000115,000 of its note payable along with $7,414 of accrued interest into shares of common stock.
During the nine months ended March 31, 2023, the Company issued shares of common stock for services. The shares were valued at the closing price on the date of grant, for total non-cash expense of $69,905.
On March 15, 2023, pursuant to the terms Common Stock Purchase Agreement and a Registration Rights Agreement with Keystone Capital Partners, LLC (“Keystone”) the Company issued commitment shares to Keystone. The shares were valued at $, the price on the date of grant, for total non-cash expense of $16,000.
Refer to Note 5 for shares issued to related parties.
NOTE 1211 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the unaudited financial statements were issued and has determined that no material subsequent events exist other than the following.
1. On January 3, 2023,The Company is discussing the terms of the purchase of certain assets with The Mepe Trust and the LBZNESS Trust related to “Barotex” proprietary technology. At the time of this report, the Company sold 57,750 shareshas not yet entered into definitive agreements. The definitive agreements will supersede the terms of Series C Preferred shares to Geneva Roth Remark Holdings Inc.
2. On January 17, 2023,the Letter of Intent dated May 23, 2022, between the Company sold 56,950 shares of Series C Preferred shares to Geneva Roth Remark Holdings Inc.and the Mepe Trust.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer. You should, however, consult further disclosures we make in future filings of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
BUSINESS
Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada. Our prior business plans, which generated limited or no earnings, included interior decorating products, and a travel and tourism service.
On May 14, 2018, Richard Carey our President and Chairman of the Board, acquired 22,000,000 shares of common stock of the Company, representing 62.15% ownership of the Company which constitutes control. Mr. Carey accepted the positions of President and Chairman of the Board on the same day.
Current officers and directors are as follows:
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Star is an innovative Company founded for the pursuit of precious metals mining, employing ourand on acquiring highly specialized, environmentally safe and patented technologies for the extraction of Gold,gold, silver and other metals including lithium and rare earth elements with an additional focus on biodegradable technologies that will dramatically improve many everyday applications.
Star acquired the Troy Mine onOn August 13, 2019. This purchase includes2019, Star acquired 78 mining claims andfrom Troy Mining Corporation, together with the equipment located at the mine head. The reserves have been estimated at 2 million ounces by Robert Garcia a qualified geologist who prepared his report for the US government. Star is currently working with the Forestry Service and BLM to finalize the permits to reopen the mine. We expect to restart mining operations utilizing the Genesis process in the third quarter of 2023.
The Company’s business focus will be the pursuit of mining and mining technology businesses. The Company acquired the assets of Troy Mining Corporation, its first mining assets, on August 13, 2019 and paid the remaining debtdue on this transaction in 2022.
InOn January 1, 2022, Star completed the acquisition of 51% of Compania Minera Metalurgica Centro Americana S.A. (“Commsa”) which owns 5 gold mines in Honduras.
In December 2022, Star completed
On March 14, 2023, the acquisitionCompany renewed the employment agreements with Mr. Carey and Mr. Anish (the “New Employment Agreements”), stating that the effective date of the patent, trade mark, equipmentNew Employment Agreement is August 1, 2022 and inventory assetsthat they have a term of Barotex. Magma International Inc. will be36 months, the company that holds all these assets and will be a subsidiarysame as the terms of Star alliance International Corp. with 75% ownership.
Results of Operationsthe initial employment agreements. The new employment agreements, except for the Three Months Ended December 31, 2022compensation provisions, contain the same provisions as Compared to the Three Months Ended December 31, 2021initial employment agreement for each executive.
Operating expenses
General and administrative expenses (“G&A”) were $310,158 for the three months ended December 31, 2022, compared to $1,040,838 for the three months ended December 31, 2021, a reduction of $730,680. In the current period we recognized $165,000 of non-cash expense for stock issued for mine development services.
Professional fees were $67,000 for the three months ended December 31, 2022, compared to $11,020 for the three months ended December 31, 2021, an increase of $55,980. Professional fees consist mainly of legal, accounting and audit expense. The increase in the current period is due to an increase in legal and audit fees during the period
Consulting fees were $514,718 for the three months ended December 31, 2022, compared to $188,362 for the three months ended December 31, 2021.
Director compensation was $197,400 and $30,000 for the three months ended December 31, 2022 and 2021, respectively. Monthly compensation to our director was increased in January 2021.
Officer compensation for our CEO was $45,000 and $45,000 for the three months ended December 31, 2022 and 2021, respectively. Monthly compensation to our CEO was increased in January 2021.
Other income (expense)
For the three months ended December 31, 2022 and 2021, we had interest expense of $67,855 and $1,182, respectively.
Net Loss
Net loss for the three months ended December 31, 2022 was $2,182,732 compared to $1,136,402 for the three months ended December 31, 2021. The large increase in our net loss is due to non-cash stock compensation expense.
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Under the terms of the New Employment Agreement, Mr. Carey is entitled to receive the following compensation:
| · | For the period from August 1, 2022 to December 31, 2022, Mr. Carey received a base salary equal to $180,000; |
| · | For the period from January 1, 2023 to July 31, 2024, Mr. Carey will receive a base salary equal to $240,000; and |
| · | For the period from August 1, 2024 to July 31, 2025, Mr. Carey will receive a base salary equal to $270,000. |
In addition, Mr. Carey is entitled to receive equity compensation, as to be determined by the Board of Directors of the Company.
Under the terms of the New Employment Agreement, Mr. Anish is entitled to receive s the following compensation:
| · | For the period from August 1, 2022 to December 31, 2022, Mr. Anish received a base salary equal to $120,000; |
| · | For the period from January 1, 2023 to July 31, 2024, Mr. Anish will receive a base salary equal to $180,000; and |
| · | For the period from August 1, 2024 to July 31, 2025, Mr. Anish will receive a base salary equal to $210,000. |
In addition, Mr. Anish is entitled to receive equity compensation, as to be determined by the Board of Directors of the Company.
March 19, 2023, the Company entered into and executed a share purchase agreement (the “Share Purchase Agreement”) with Lions Works Advertising, SA, a Guatemalan corporation (“Lion Works”) and Juan Lemus, the sole shareholder of Lion Works, pursuant to which it acquired from Mr. Lemus 51% of the capital stock of Lion Works, including 51% of the intellectual property rights and know-how related to the Genesis extraction system (“Genesis”), The Share Purchase Agreement superseded the terms of the binding Letter of Intent that the parties entered into and executed by the parties on November 21, 2021. Pursuant to the terms of the Share Purchase Agreement, Genesis will be managed by a new company, in which the Company will own 51% interest, with the remaining 49% interest to be owned by Juan Lemus. The Company’s title and rights to Genesis are subject to the satisfaction of the following obligations:
| · | The Company shall pay the total purchase price of $5,100,000 in cash, with the first minimum payment in the amount of $2,550,000 to be paid by September 30, 2023, and the remaining outstanding balance of $2,550,000 to be paid by September 30, 2024, within 12 months of the first payment. | |
| · | The Company will invest an additional 5,000,000 as a working capital toward development of the Genesis plants, with $2,000,000 to be paid by July 31, 2023 and the remaining $3,000,000 to be paid by July 31, 2024, within 12 months of the first payment. | |
| · | The Company will engage a patent attorney and pay for the cost of that patent attorney to prepare the patent application related to Genesis and to register that patent, provided that Lion Works will engage an expert to prepare a report on the Genesis system, to be used in this patent application. for the acquisition of Genesis |
To secure the Company’s obligations under the Share Purchase Agreement, Juan Lemus placed the lien on the Company’s 51% ownership in Lion Works, and, upon formation of a new company, that lien will be placed on the Company’s ownership in that newly formed subsidiary. Such lien shall continue until the Company performs all its obligations under the Share Purchase Agreement, which subjects the Company to the risk of losing its title to Genesis in the event of breach of its obligations set forth in the Share Purchase Agreement.
The Company is discussing the terms of the purchase of certain assets with The Mepe Trust and the LBZNESS Trust related to “Barotex” proprietary technology. At the time of this report, the Company has not yet entered into definitive agreements. The definitive agreements will supersede the terms of the Letter of Intent dated May 23, 2022, between the Company and the Mepe Trust.
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Results of Operations for the SixThree Months Ended DecemberMarch 31, 20222023 as Compared to the SixThree Months Ended DecemberMarch 31, 20212022
Operating expenses
General and administrative expenses (“G&A”) were $878,602$80,556 for the sixthree months ended DecemberMarch 31, 2022,2023, compared to $1,051,400$199,558 for the sixthree months ended DecemberMarch 31, 2021,2022, a reduction of $172,798. In$119,002. The reduction was mainly due to much smaller overheads for the current period we recognized $9,177,563 of non-cash expense for services, loss on conversion of preferred stock and derivatives associated with convertible debt.Troy mine as no work was performed during this quarter.
Professional fees were $67,000$22,130 for the sixthree months ended DecemberMarch 31, 2023, compared to $93,500 for the three months ended March 31, 2022, compared to $28,190 for the six months ended December 31, 2021, an increasereduction of $53,980.$71,370. Professional fees consist mainly of legal, accounting and audit expense. The increasedecrease in the current period is due to an increasereductions in audit and legal fees.fees during the period
Consulting fees were $1,094,093$16,500 for the sixthree months ended DecemberMarch 31, 2022,2023, compared to $188,362$3,827,475 for the sixthree months ended DecemberMarch 31, 2021. In2022. The reduction of $3,810,975 was mainly due to a reduction in non cash expenses for consultants during the prior period we issued shares of common stock for $188,362 that related to non-cash consulting expense.earlier period.
Director compensation was $4,607,400$60,000 and $60,000$1,469,000 for the sixthree months ended DecemberMarch 31, 2023 and 2022, respectively. Our Chairman signed a new employment agreement on March 15, 2023 and 2021, respectively.monthly compensation was increased to $20,000 per month commencing January 1, 2023. The reduction of $1,409,000 in Dorector’s compensation was mainly due to the elimination during the period of non-cash stock compensation payments.
Officer compensation for our CEO was $1,490,000$45,000 and $90,000$817,500 for the sixthree months ended DecemberMarch 31, 2023and 2022 respectively. Our Chief Financial Officer signed a new employment agreement on March 15, 2023 and 2021, respectively.monthly compensation to was increased to $15,000 per month commencing January 1, 2023. The reduction of $772,500 in officer compensation was mainly due to the elimination of non-cash stock compensation expenses.
Other income (expense)
For the sixthree months ended DecemberMarch 31, 20222023 and 2021,2022, we had interest expense of $203,510$56,151 and $2,064,$6,780, respectively.
Net Loss
Net loss for the sixthree months ended DecemberMarch 31, 20222023 was $9,559,411$384,009 compared to $1,404,846$8,016,068 for the sixthree months ended DecemberMarch 31, 2021.2022. The large increasedecrease in our net loss is due to the elimination during the period of non-cash stock compensation expense.
Results of Operations for the nine Months Ended March 31, 2023 as Compared to the Nine Months Ended March 31, 2022
Operating expenses
General and administrative expenses (“G&A”) were $959,158 for the nine months ended March 31, 2023, compared to $1,250,958 for the nine months ended March 31, 2022, a reduction of $291,800. The reduction was primarily due to a reduction in costs at the Troy mine.
Professional fees were $89,130 for the nine months ended March 31, 2023, compared to $106.520 for the nine months ended March 31, 2022, an reduction of $17,390. Professional fees consist mainly of legal, accounting and audit expense. The decrease in the current period is due to a decrease in legal fees.
Consulting fees were $1,110,593 for the nine months ended March 31, 2023, compared to $4,015,837 for the nine months ended March 31, 2022. The reduction in consulting fees expense of $2,905,244 was due to the issuance of stock for non-cash consulting expenses in the prior period.
Director compensation was $3,207,400 and $1,529,000 for the nine months ended March 31, 2023 and 2022, respectively. The increase of $1,678,400 in the current period was due to non cash stock compensation.
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Officer compensation was $2,885,0000 and $907,500 for the nine months ended March 31, 2023 and 20221, respectively. The increase of $1,977,500 in the current period was mainly due to non-cash stock compensation expenses.
Other income (expense)
For the nine months ended March 31, 2023 and 2022, we had interest expense of $259,661 and $8,884, respectively an increase of $250,777 mainly due to interest charges on loans and convertible notes.
Net Loss
Net loss for the nine months ended March 31, 2023 was $9,943,420 compared to $9,420,914 for the nine months ended March 31, 2022. The increase of $522,506 in our net loss is mainly due to non-cash stock compensation expense.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying unaudited financial statements, the Company has an accumulated deficit of $24,617,811$25,001,820 as of DecemberMarch 31, 2022.2023. For the sixnine months ended DecemberMarch 31, 2022,2023, the Company had a net loss of $9,559,411,$9,943,420, which did include $9,177,563over $8 million of non-cash expense incurred for the issuance of common stock for services, loss on conversion of preferred stock and derivatives associated with convertible debt. We used $180,861($405,769) of cash in operating activities. Due to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern.
Net cash used in operating activities was $180,861$(405,769) during the three months ended DecemberMarch 31, 2022,2023, compared to $40,046$(1,424,871) in the three months ended DecemberMarch 31, 2021.2022. We had a loss on conversion of preferred stock in the amount of $758,124.$97,249.
Net cash provided by financing activities was $111.225$337,652 and $43,550$1,589,315 for the three months ended DecemberMarch 31, 20222023 and 2021,2022, respectively. In the current period we received $97,250$261,200 from the sale of preferred stock. We paid $5,881 reducing notes payable to $113,335.
Over the next twelve months, we expect our principal source of liquidity will be raised from the sale of stock.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout management's Discussion and Analysis or Plan of Operation where such policies affect our reported and expected financial results. Note that our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.
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Item 3. Quantitative and Qualitative Disclosure about Market Risk
This item is not applicable as we are currently considered a smaller reporting company.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (SEC) rules and forms, and that such information is accumulated and communicated to our management, including our Chairman, Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Disclosure Controls
In designing and evaluating the Company's disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, Company management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Evaluation of Disclosure Controls and Procedures
Our CEO and CFO, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on the evaluation, they have concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures were not effective as of December 31, 2022, due to the material weaknesses as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC.
Changes in Internal Control over Financial Reporting
Such officers also confirmed that there was no change in our internal control over financial reporting during the three and sixnine months ended DecemberMarch 31, 20222023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of their property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: | By: | /s/ Richard Carey | |
| Richard Carey | |||
| Chairman | |||
| By: | /s/ Anthony L. Anish | ||
| Date: | Anthony L. Anish | ||
| Chief Financial Officer | |||
| 22 |