Table of Contents

UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

 

FORM 10-Q/A10-Q

Amendment No. 1

____________________

 

(MARK ONE)

 

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022March 31, 2023

 

or

 

☐     TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number: 333-170315

 

GlobeStar Therapeutics Corporation

(Exact name of registrant as specified in its charter)

 

Wyoming 27-3480481
(State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification Number)
   
719 Jadwin Avenue, Richland, WA 99352
(Address of principal executive offices) (Zip code)

 

Registrant’s telephone number, including area code: 206-451-1970

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒    No ☐

 

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

 

 Large accelerated filer☐Accelerated filer☐
 Non-accelerated filer☒Smaller reporting company☐
 (Do not check is smaller reporting company)Emerging growth company☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)   Yes ☐    No ☒

 

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

 

Title of each classTrading SymbolName of each exchange on which registered
CommonGSTCN/A

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 22, 2022,May 25, 2023, 693,996,935787,688,270 shares of common stock issued and outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 (“Form 10-Q”) is to submit Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 consists of the Inline XBRL Interactive Data files for the Registrant’s Form 10-Q for the quarterly period ended June 30, 2022, filed with the Securities and Exchange Commission on August 22, 2022.

 

 

TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION4
  
Item 1. Financial Statements4
  
Consolidated Balance Sheets as of June 30, 2022March 31, 2023 (Unaudited) and September 30, 202120224
  
Consolidated Statements of Operations for the Three and NineSix Months Ended June 30,March 31, 2023 and 2022 and 2021 (Unaudited)5
  
Consolidated Statements of Stockholders'Stockholders’ Deficit for the Three and NineSix Months Ended June 30,March 31, 2023 and 2022 and 2021 (Unaudited)6-7
  
Consolidated Statements of Cash Flows for the NineSix Months Ended June 30,March 31, 2023 and 2022 and 2021 (Unaudited)8
  
Notes to the Unaudited Consolidated Financial Statements9
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations15
  
Item 3. Quantitative and Qualitative Disclosures about Market Risk17
  
Item 4. Controls and Procedures17
  
PART II — OTHER INFORMATION18
  
Item 1. Legal Proceedings18
  
Item 1A. Risk Factors18
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds18
  
Item 3. Defaults upon Senior Securities18
  
Item 4. Mine Safety Disclosures18
  
Item 5. Other Information18
  
Item 6. Exhibits19
  
SIGNATURES20

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.2022. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

OTHER PERTINENT INFORMATION

 

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to GlobeStar Therapeutics Corporation, a Wyoming corporation and its subsidiaries unless the context specifically indicates otherwise.

 

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PART I — FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

GLOBESTAR THERAPEUTICS CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

     
        March 31, September 30, 
 June 30, September 30,  2023 2022 
 2022 2021  (unaudited)   
CURRENT ASSETS          
Cash and cash equivalents $12 $5,960  $176 $6,365 
Prepaid expenses  —  3,550 
Total current assets  12  5,960  176 9,915 
       
TOTAL ASSETS $12 $5,960  $176 $9,915 
          
LIABILITIES AND STOCKHOLDERS' DEFICIT     
LIABILITIES AND STOCKHOLDERS’ DEFICIT     
Current Liabilities          
Accounts payable and accrued liabilities $220,729 $222,778  $450,135 $380,735 
Accounts payable to related party 292,972 119,655  467,981 379,126 
Related party advances 7,400 —  13,100 12,400 
Advances payable 59,650 59,650  59,650 59,650 
Current portion of convertible notes payable, net of discount of $0, respectively 20,000 20,000 
Series G Preferred Stock Liability, net of discount of $15,574 and $30,745, respectively 139,801 86,130 
Current portion of accrued interest payable  225,906  223,568 
Current portion of convertible notes payable — 20,000 
Series G Preferred Stock Liability, net of discount of $13,097 and $12,581, respectively 76,003 126,294 
Accrued interest payable  223,977  226,270 
Total current liabilities 966,458 731,781  1,290,846 1,204,475 
       
TOTAL LIABILITIES  966,458  731,781   1,290,846  1,204,475 
          
COMMITMENTS AND CONTINGENCIES — —      
          
STOCKHOLDERS’ DEFICIT          
Common stock, $0.001 par value; 684,367,305 and 561,495,726 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively 684,366 561,494 
Common stock, $0.001 par value, unlimited shares authorized; 780,427,183 and 722,326,669 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively 780,425 722,325 
Preferred stock; 20,000,000 shares authorized:          
Series D Preferred Stock, $0.001 par value; 509,988 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively 510 510 
Series E Preferred Stock, $0.001 par value; 1,000,000 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively 1,000 1,000 
Series F Preferred Stock; $0.001 par value; 257,984 and 386,975 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively 258 387 
Series A Preferred Stock, $0.001 par value, 0 and 0 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively — — 
Series B Preferred Stock, $0.001 par value, 0 and 0 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively — — 
Series C Preferred Stock, $0.001 par value, 0 and 0 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively — — 
Series D Preferred Stock, $0.001 par value; 509,988 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively 510 510 
Series E Preferred Stock, $0.001 par value; 1,000,000 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively 1,000 1,000 
Series F Preferred Stock; $0.001 par value; 128,991 and 128,991 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively 129 129 
Additional paid-in capital 16,543,888 15,228,254  16,723,188 16,581,252 
Stock payable, consisting of 0 and 25,980,000 shares to be issued at June 30, 2022 and September 30, 2021, respectively — 499,500 
Stock payable, consisting of 10,530,304 and 1,515,152 shares to be issued at March 31, 2023 and September 30, 2022, respectively 25,000 5,000 
Accumulated deficit  (18,196,468) (17,016,966)  (18,820,922) (18,504,776)
          
TOTAL STOCKHOLDERS’ DEFICIT  (966,446) (725,821)  (1,290,670) (1,194,560)
          
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $12 $5,960  $176 $9,915 

 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

 

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GLOBESTAR THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

                         
 Three Months Ended Nine Months Ended  Three Months Ended Six Months Ended 
 June 30, June 30,  March 31, March 31, 
 2022 2021 2022 2021  2023 2022 2023 2022 
          
REVENUE $— $— $— $—  $— $— $— $— 
Cost of goods sold  —  —  —  2,412   —  —  —  — 
Gross profit (loss) — — — (2,412)
         
Gross margin  —  —  —  — 
                    
OPERATING EXPENSES                  
General and administrative expenses $136,618  4,478,111  965,222  5,006,455   142,059  662,310  297,300  828,604 
Total operating expenses  136,618  4,478,111  965,222  5,006,455   142,059  662,310  297,300  828,604 
                  
LOSS FROM OPERATIONS (136,618) (4,478,111) (965,222) (5,008,867)  (142,059) (662,310) (297,300) (828,604)
                  
OTHER INCOME (EXPENSE)                  
Loss on settlement of liabilities — (5,438) (146,460) (317,200) — — — (146,460)
Loss on conversion of preferred stock liability (10,821) — (10,821) — 
Interest expense (10,664) (34,949) (56,999) (212,657)  (8,178) (26,248) (18,846) (46,335)
Total other expense  (21,485) (40,387) (214,280) (529,857)
Total other income (expense)  (8,178) (26,248) (18,846) (192,795)
                  
Net Loss $(158,103)$(4,518,498)$(1,179,502)$(5,538,724)
Net loss $(150,237)$(688,558)$(316,146)$(1,021,399)
                  
Net loss per share available to common shareholders $(0.00)$(0.01)$(0.00)$(0.01)
Net loss per common share $(0.00)$(0.00)$(0.00)$(0.00)
                    
Weighted average shares outstanding - basic and diluted  637,492,475  476,727,678  603,807,518  464,087,148   773,432,215  600,796,122  764,419,403  586,965,040 

 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

 

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GLOBESTAR THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

                                  
          Original       
    Series D Series E Series F Additional       
  Common Stock Preferred Stock Preferred Stock Preferred Stock Paid-in Stock Accumulated Total 
  Shares Par Shares Amount Shares Amount Shares Amount Capital Payable Deficit Deficit 
                                  
Balance, September 30, 2020 436,218,342 $436,217 509,988 $510 1,000,000 $1,000 386,975 $387 $6,118,002 $— $(7,215,338)$(659,222)
                                  
Common stock issued for conversion of convertible note payable and accrued interest 19,269,286  19,269 —  — —  — —  —  45,391  —  —  64,660 
Beneficial conversion discount on convertible notes payable —  — —  — —  — —  —  30,000  —  —  30,000 
Net loss for the three months ended December 31, 2020 —  — —  — —  — —  —  —  —  (124,395) (124,395)
Balance, December 31, 2020 455,487,628  455,486 509,988  510 1,000,000  1,000 386,975  387  6,193,393  —  (7,339,733) (688,957)
                                  
Issuance of common stock and retirement of accrued compensation with former officer 2,600,000  2,600 —  — —  — —  —  132,600  312,000  —  447,200 
Common stock issued for conversion of convertible note payable and accrued interest 17,551,147  17,552 —  — —  — —  —  97,990  —  —  115,542 
Sale of common stock units for cash proceeds —  — —  — —  — —  —  —  499,500  —  499,500 
Repurchase of preferred stock from former officer —  — —  — (1,000,000) (1,000)—  —  (324,000) —  —  (325,000)
Issuance of preferred stock to officer —  — —  — 1,000,000  1,000 —  —  324,000  —  —  325,000 
Settlement of accounts payable with related party —  — —  — —  — —  —  38,130  —  —  38,130 
Beneficial conversion discount on convertible notes payable —  — —  — —  — —  —  100,000  —  —  100,000 
Net loss for the three months ended March 31, 2021 —  — —  — —  — —  —  —  —  (895,831) (895,831)
Balance, March 31, 2021 475,638,775 $475,638 509,988 $510 1,000,000 $1,000 386,975 $387 $6,562,113 $811,500 $(8,235,564)$(384,416)
                                  
Common stock issued for conversion of convertible note payable and accrued interest 1,193,857  1,194 —  — —  — —  —  33,786  —  —  34,980 
Beneficial conversion discount on convertible notes payable —  — —  — —  — —  —  30,000  —  —  30,000 
Stock-based compensation —  — —  — —  — —  —  4,209,179  —  —  4,209,179 
Net loss for the three months ended June 30, 2021 —  — —  — —  — —  —  —  —  (4,518,498) (4,518,498)
Balance, June 30, 2021 476,832,632 $476,832 509,988 $510 1,000,000 $1,000 386,975 $387 $10,835,078 $811,500 $(12,754,062)$(628,755)

                                       
            Original       
    Series A Series D Series E Series F Additional     Total 
  Common Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Paid-in Stock Accumulated Equity 
  Shares Par Shares Amount Shares Amount Shares Amount Shares Amount Capital Payable Deficit (Deficit) 
                                       
Balance,
September 30, 2021		 561,495,726 $561,494 — $— 509,988 $510 1,000,000 $1,000 386,975 $387 $15,228,254 $499,500 $(17,016,966)$(725,821)
                                       
Conversion of Series F Preferred Stock to common 12,899,100  12,899 —  — —  — —  — (128,991) (129) (12,770) —  —  — 
Common stock issued for stock payable 19,980,000  19,980 —  — —  — —  — —  —  479,520  (499,500) —  — 
Common stock issued for settlement of liability 6,000,000  6,000 —  — —  — —  — —  —  155,460  —  —  161,460 
Net loss for the three months ended December 31, 2021 —  — —  — —  — —  — —  —  —  —  (332,841) (332,841)
Balance,
December 31, 2021		 600,374,826 $600,373 — $— 509,988 $510 1,000,000 $1,000 257,984 $258 $15,850,464 $— $(17,349,807)$(897,202)
                                       
Conversion of Series G Preferred Stock to common stock 5,416,667  5,417 —  — —  — —  — —  —  20,583  —  —  26,000 
Stock-based compensation —  — —  — —  — —  — —  —  322,266  —  —  322,266 
Stock-based compensation, related parties —  — —  — —  — —  — —  —  154,095  —  —  154,095 
Net loss for the three months ended March 31, 2022 —  — —  — —  — —  — —  —  —  —  (688,558) (688,558)
Balance,
March 31, 2022		 605,791,493 $605,790 — $— 509,988 $510 1,000,000 $1,000 257,984 $258 $16,347,408 $— $(18,038,365)$(1,083,399)

 

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          Original       
    Series D Series E Series F Additional       
  Common Stock Preferred Stock Preferred Stock Preferred Stock Paid-in Stock Accumulated Total 
  Shares Par Shares Amount Shares Amount Shares Amount Capital Payable Deficit Deficit 
                                  
                                  
Balance, September 30, 2021 561,495,726 $561,494 509,988 $510 1,000,000 $1,000 386,975 $387 $15,228,254 $499,500 $(17,016,966)$(725,821)
                                  
Conversion of Series F Preferred Stock to common 12,899,100  12,899 —  — —  — (128,991) (129) (12,770) —  —  — 
Common stock issued for stock payable 19,980,000  19,980 —  — —  — —  —  479,520  (499,500) —  — 
Common stock issued for settlement of liability 6,000,000  6,000 —  — —  — —  —  155,460  —  —  161,460 
Net loss for the three months ended December 31, 2021 —  — —  — —  — —  —  —  —  (332,841) (332,841)
Balance, December 31, 2021 600,374,826  600,373 509,988  510 1,000,000  1,000 257,984  258  15,850,464  —  (17,349,807) (897,202)
                                  
Conversion of Series G Preferred Stock to common 5,416,667  5,417 —  — —  — —  —  20,583  —  —  26,000 
Stock-based compensation —  — —  — —  — —  —  322,266  —  —  322,266 
Stock-based compensation, related parties —  — —  — —  — —  —  154,095  —  —  154,095 
Net loss for the three months ended March 31, 2022 —  — —  — —  — —  —  —  —  (688,558) (688,558)
Balance, March 31, 2022 605,791,493 $605,790 509,988 $510 1,000,000 $1,000 257,984 $258 $16,347,408 $— $(18,038,365)$(1,083,399)
                                  
Conversion of Series G Preferred Stock to common 78,575,812  78,576 —  — —  — —  —  182,235  —  —  260,811 
Stock-based compensation, related parties —  — —  — —  — —  —  14,245  —  —  14,245 
Net loss for the three months ended June 30, 2022 —  — —  — —  — —  —  —  —  (158,103) (158,103)
Balance, June 30, 2022 684,367,305 $684,366 509,988 $510 1,000,000 $1,000 257,984 $258 $16,543,888 $— $(18,196,468)$(966,446)

GLOBESTAR THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

                                       
            Original       
    Series A Series D Series E Series F Additional     Total 
  Common Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Paid-in Stock Accumulated Equity 
  Shares Par Shares Amount Shares Amount Shares Amount Shares Amount Capital Payable Deficit (Deficit) 
                                       
Balance,
September 30, 2022		 722,326,669 $722,325 — $— 509,988 $510 1,000,000 $1,000 128,991 $129 $16,581,252 $5,000 $(18,504,776)$(1,194,560)
                                       
Common stock subscribed for cash proceeds —  — —  — —  — —  — —  —  —  5,000  —  5,000 
Conversion of Series G Preferred Stock to common stock 48,033,947  48,034 —  — —  — —  — —  —  52,066  —  —  100,100 
Stock-based compensation, related parties —  — —  — —  — —  — —  —  17,803  —  —  17,803 
Net loss for the three months ended December 31, 2022 —  — —  — —  — —  — —  —  —  —  (165,909) (165,909)
Balance,
December 31, 2022		 770,360,616 $770,359 — $— 509,988 $510 1,000,000 $1,000 128,991 $129 $16,651,121 $10,000 $(18,670,685)$(1,237,566)
                                       
Common stock subscribed for cash proceeds —  — —  — —  — —  — —  —  —  15,000  —  15,000 
Common stock issued for conversion of debt 2,000,000  2,000 —  — —  — —  — —  —  18,000  —  —  20,000 
Conversion of Series G Preferred Stock to common stock 8,066,567  8,066 —  — —  — —  — —  —  36,264  —  —  44,330 
Stock-based compensation, related parties —  — —  — —  — —  — —  —  17,803  —  —  17,803 
Net loss for the three months ended March 31, 2023 —  — —  — —  — —  — —  —  —  —  (150,237) (150,237)
Balance,
March 31, 2023		 780,427,183 $780,425 — $— 509,988 $510 1,000,000 $1,000 128,991 $129 $16,723,188 $25,000 $(18,820,922)$(1,290,670)

 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

 

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GLOBESTAR THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

             
 Nine Months Ended  Six Months Ended 
 June 30,  March 31, 
 2022 2021  2023 2022 
          
CASH FLOW FROM OPERATING ACTIVITIES:          
Net loss $(1,179,502)$(5,538,724) $(316,146)$(1,021,399)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock compensation 322,266 4,534,179  — 322,266 
Stock compensation, related parties 168,340 —  35,606 154,095 
Depreciation  —  1,275 
Amortization of discount on convertible note payable 44,046 201,636  15,584 35,417 
Loss on settlement of liabilities 146,460 317,200  — 146,460 
Loss on conversion of preferred stock liability 10,821 — 
Changes in operating assets and liabilities          
Inventory — 2,412 
Prepaid expenses — 4,783  3,550 — 
Accounts payable and accrued liabilities 12,951 84,035  76,400 17,981 
Accounts payable and accrued liabilities to related party 173,317 51,717  88,855 93,878 
Accrued interest payable  12,953  11,021   3,262  10,918 
NET CASH USED IN OPERATING ACTIVITIES  (288,348) (330,466)  (92,889) (240,384)
          
CASH FLOWS FROM INVESTING ACTIVITIES     
Cash used to acquire fixed assets  —  — 
NET CASH USED IN INVESTING ACTIVITIES  —  — 
     
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from convertible notes payable, net — 95,000 
Proceeds from sale of Series G Preferred Stock 275,000 —  73,000 235,000 
Proceeds from related party advances 23,900 —  700 — 
Repayment of related party advances (16,500) — 
Repurchase of preferred stock from former officer — (325,000)
Proceeds from sale of common stock — 499,500 
Proceeds from common stock subscribed 13,000 — 
NET CASH PROVIDED BY FINANCING ACTIVITIES  282,400  269,500   86,700  235,000 
          
NET INCREASE IN CASH  (5,948) (60,966)
NET CHANGE IN CASH  (6,189)  (5,384) 
              
Cash at beginning of period  5,960  81,442   6,365  5,960 
              
Cash at end of period $12 $20,476  $176 $576 
              
Cash paid during the period for:              
Interest $— $—  $— $— 
Taxes $— $—  $— $— 
              
Noncash investing and financing transactions:              
Conversion of convertible notes payable and accrued interest into common stock $— $215,180 
Beneficial conversion discount on convertible note payable $— $160,000 
Conversion of Series F preferred stock $12,899 $—  $— $12,889 
Conversion of Series G preferred stock $265,375 $— 
Conversion of Series G preferred stock and accrued interest $144,430 $25,000 
Common stock issued for stock payable $499,500 $—  $— $499,500 
Common stock issued for the conversion of debt $20,000 $— 
Common stock issued for settlement of liabilities $15,000 $130,000  $— $15,000 
Settlement of liabilities with related party $— $38,130 
Expenses paid on the Company's behalf for subscription agreement $7,000 $— 

 

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

 

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GLOBESTAR THERAPEUTICS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022March 31, 2023

(Unaudited)

 

Note 1. General Organization and Business

 

GlobeStar Therapeutics Corporation (the “Company”) was incorporated on April 29, 2016. The Company’s year-end is September 30. On October 4, 2019, the Company filed Articles of Continuance with the Secretary of State of Wyoming to continue its business in the state of Wyoming. As part of these Articles of Continuance, effective October 4, 2019, the Company has no limit on the authorized shares of common stock that can be issued. The Company filed its Certificate of Dissolution with the Secretary of State of Nevada on October 21, 2019 because it is no longer a Nevada corporation.

 

The Company is developing an expanded platform of products that include addition of treatment for Multiple Sclerosis and other neurodegenerative diseases. The potential pharmaceutical products related to treatment for multiple sclerosis are licensed to the Company through the worldwide licensing agreement described in Note 6.

 

Note 2. Going Concern and Summary of Significant Accounting Policies

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the ninesix months ended June 30, 2022,March 31, 2023, the Company had a net loss of $1,179,502316,146 and cash flow used in operating activities of $288,34892,889. As of June 30, 2022,March 31, 2023, the Company had negative working capital of $966,4461,290,670. Management does not anticipate having positive cash flow from operations in the near future. The Company has minimal revenue. Without additional capital, the Company will not be able to remain in business.

 

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying 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 from the possible inability of the Company to continue as a going concern.

 

Management has plans to address the Company’s financial situation as follows:

 

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

 

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company, which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.

 

Interim Financial Statements

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X and should be read in conjunction with the audited financial statements and notes thereto for the year ended September 30, 20212022 which are included on our Form 10-K filed on January 5, 2022.9, 2023. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the ninethree and six months ended June 30, 2022March 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year ending September 30, 2022.2023.

 

Consolidated Financial Statements

 

The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, SomaCeuticals, Inc., First Titan Energy, LLC and First Titan Technical, LLC from the date of their formations or acquisition. Significant intercompany transactions have been eliminated in consolidation.

 

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Recently Issued Accounting Pronouncements

 

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

 

 

Note 3. Convertible Notes Payable

 

Convertible notes payable consisted of the following at June 30, 2022March 31, 2023 and September 30, 2021:2022:

           
 June 30,
2022		 September 30,
2021		  March 31,
2023		 September 30,
2022		 
Convertible note dated April 13, 2017 in the original principal amount of $20,000, no stated maturity date, bearing interest at 3% per year, convertible into common stock at a rate of $0.01 per share. $20,000 $20,000  $— $20,000 
          
Total current convertible notes payable, net of discount $20,000 $20,000  $— $20,000 

 

All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.99% of the outstanding stock of the Company.

 

During the nine months ended June 30, 2021, the Company recognized $17,000 of deferred finance costs from its new convertible note payable and $160,000 of new discount related to the beneficial conversion features of convertible notes payable.

During the three and nine months ended June 30, 2021, the Company recognized interest expense on convertible notes of $2,225 and $10,931 and amortization of discount on convertible notes payable of $32,452 and $201,636, respectively.

As of June 30, 2022March 31, 2023 and September 30, 2021,2022, accrued interest on convertible notes payable was $222,287.

 

Conversions to Common Stock

During the six months ended March 31, 2023, the holders of the convertible notes payable elected to convert principal of $20,000 into 2,000,000 shares of common stock. The conversion was in accordance with the terms of the agreement and no gain or loss was recognized.

Advances

 

As of June 30, 2022March 31, 2023 and September 30, 2021,2022, the Company had non-interest bearing advances payable to third parties of $59,650. These advances are payable on demand.

 

Note 4. Related Party Transactions

 

In January 2021, the Company’s former Chief Executive Officer Sydney Jim agreed to forgive all accrued but unpaid compensation of $38,130, resulting in a gain on settlement of liabilities to the Company that was recorded to additional paid in capital.

In March 2021, the Company entered into severance agreement with its former CEO Alex Blankenship. The Company owed Ms. Blankenship unpaid compensation of $130,000 and agreed to issue 8,600,000 shares of common stock in full settlement of this amount and release from the employment agreement with her. The shares had a fair value of $447,200 based on the stock price at the date of the agreement. The Company recognized a loss on settlement of $317,200 in connection with this agreement. As of March 31, 2021, 2023 and September 30, 2022, the Company owed $2,600,000467,981 and $379,126 to officers of the shares were issued to Ms. Blankenship. Concurrently with the severance agreement,Company for compensation which are recorded as accounts payable related party. Additionally, the Company agreed to purchase the 1,000,000 shares Series E Preferred Stock held by Ms. Blankenship for $325,000 in cash. The Company reissued those Series E preferred Shares toreceived short term, unsecured, non-interest bearing advances from the Company’s new CEO James Katzaroff. Thetotaling $700. As of March 31, 2023, the Company recognized stock-based compensation ofowed $325,00013,100 on these related to this reissuance.party advances.

 

In February 2022, the Company entered into an amended and restatement employment agreement with Jim Katzaroff, the CEO. Mr. Katzaroff is entitled to an annual salary of $180,000 and a bonus as determined by the Board of Directors. Mr. Katzaroff may elect to receive payment in shares of stock based on the average of the three lowest trading prices for the 15 days prior to election of payment in stock. Further, in the event of a change of control of the Company, Mr. Katzaroff is entitled to a payment equal to 2.99 multiplied by the larger of the total compensation paid to Mr. Katzaroff over the prior 12-month period or the average compensation paid or payable to the Consultant over the prior three years.

 

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The Company awarded Mr. Katzaroff a total of 35,000,000 common stock options with an exercise price of $0.009 per share, an exercise term of five years. The options vest 50% immediately, and the remainder on monthly basis over two years. Mr. Katzaroff is also entitled to additional options in the event of the Company issuing equity or equity equivalents in the future, with him receiving an equal amount of options as those instruments that are issued. The exercise price of these additional options will be 110% of the price per equity equivalent. The total fair value of these option grants at issuance was $284,840. During the six months ended March 31, 2023 and 2022, the Company recognized $35,606 and $154,095 of stock-based compensation, related to outstanding stock options under this agreement, respectively. At March 31, 2023, the Company had $62,308 of unrecognized expense related to options.

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Additionally, Mr. Katzaroff will earn a fee related to anany strategic transaction, as defined in the agreement, including but not limited to acquisitions, divestitures, partnerships or joint ventures, of at least 2% for any transactions not introduced by Mr. Katzaroff, or 4% for any introduced by Mr. KatzroffKatzaroff of up to $20,000,000, and an additional 0.75% - 3.5% for amounts above that threshold. As of March 31, 2023, no amounts have been earned or paid.

 

Mr. KatzroffKatzaroff will also receive an activity fee of 3% of gross revenues related to activities including securing a variety of vendor, sales or advertising relationships, or any new revenue generating activity. If such activity is a cost saving initiative instead of revenue generating, Mr. Katzaroff will receive 10% of the cost savings.

As of June 30, 2022 and September 30, 2021, the Company owed $292,972 and $161,655 to officers of the Company for compensation, respectively. Additionally, the Company received short term, unsecured, non interest bearing advances from the Company’s CEO and CFO totaling $23,900, and repaid $16,500. As of June 30, 2022, the Company owed $7,400 on these advances.March 31, 2023, no amounts have been earned or paid.

During the year ended September 30, 2021, the Company issued 5,000,000 shares of common stock to its CFO Robert Chicoski, with a fair value of $75,000 as a finder’s fee related to the Company’s license agreement.

 

Note 5. Stockholders’ Deficit

 

Preferred Stock

 

Series A Preferred Stock – Our board of directors has designated up to 6,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock has a liquidation value of $2.00 per share. The initial number issued is 5,000,000 with additional shares to be issued as a dividend not to exceed a total of 6,000,000 shares. The rank of the Series A is prior to all common and preferred shares. In addition, the Series A Preferred Stock retains protective provisions to maintain their seniority with respect to liquidation or dissolution. The Series A Preferred Stock holds no voting rights and earns an 8% per annum dividend, payable in additional shares of Series A Preferred Stock. At March 31, 20222023 and September 30, 2021,2022, there were 0no shares of our Series A Preferred Stock outstanding, respectively.

 

Series B Preferred Stock – Our board of directors has designated up to 1,000,000 shares of Series B Preferred Stock. The Series B Preferred Stock has a liquidation value of $1.00 per share. The holders of the Series B Preferred Stock are entitled to dividends of 8%8% per year payable quarterly in cash or in shares of common stock at the option of the Company. The holders of the Series B Preferred Stock have no voting rights. The Series B Preferred Stock is redeemable at the option of the Company at a price of $1.00 per share. At March 31, 20222023 and September 30, 2021,2022, there were 0no shares of our Series B Preferred Stock outstanding.

 

Series C Preferred Stock – On September 12, 2017, our board of directors designated up to 1,200,000shares of Series C Preferred Stock with a liquidation value of $0.50per share. The holders of the Series C Preferred Stock have no voting rights. The Series C Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of one share of common stock for each share of Series C Preferred Stock. The Series C Preferred Stock is redeemable at the option of the Company at a price of $0.50 per share. The Series C Preferred Stock has been canceled, and there are no shares of Series C Preferred Stock outstanding as of March 31, 20222023 and September 30, 2021.2022.

 

Series D Preferred Stock – On September 21, 2017, our board of directors designated up to 539,988 shares of Series D Preferred Stock with a liquidation value of $1.00$1.00 per share. The holders of the Series D Preferred Stock have no voting rights. The Series D Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $0.01 per share of common stock. The Series D Preferred Stock is not redeemable. During the year ended September 30, 2019, the holders of 60,000 shares of the Series D Preferred stock returned these shares to the Company for cancellation. There was no gain or loss recognized on this transaction. At March 31, 20222023 and September 30, 2021,2022, there were 509,988 shares of Series D Preferred Stock outstanding.

 

Series E Preferred Stock – On August 3, 2015, our board of directors designated 1,000,000 shares of Series E Preferred stock. The Series E Preferred stock is subordinate to our common stock. It does not receive dividends and does not participate in equity distributions. The Series E Preferred stock retained 2/3 of the voting rights in the Company.Company.

 

At March 31, 20222023 and September 30, 2021,2022, there were 1,000,000 shares of Series E Preferred stock outstanding. Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purposes.

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Series F Preferred Stock – On September 21, 2017, our board of directors designated up to 501,975 shares of Series F Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series F Preferred Stock have no voting rights. The Series F Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $0.01 per share of common stock.stock. The Series F Preferred Stock is not redeemable. During the year ended September 30, 2019, 60,000 shares of the Series F Preferred Stock were returned for cancellation. On November 5, 2021, a holder of Series F Preferred Stock converted 128,991 shares of Series F into 12,899,100 shares of common stock of the Company in accordance with the terms of the Series F. At March 31, 2022 and September 30, 2021, 257,984 and 386,975 shares of the Series F Preferred Stock were issued and outstanding, respectively.outstanding. During the year ended September 30, 2022, 257,984 shares of Series F Preferred Stock was converted into 25,798,400 shares of common stock. At March 31, 2023 and September 30, 2022, 128,991 shares of the Series F Preferred Stock were issued and outstanding.

 

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Common stock issued for stock payable

In September 2022, the Company received $5,000 of cash as a subscription for 1,515,152 shares of common stock and an equal number of warrants to purchase common stock at an exercise price of $0.01 for one year. In December 2022, the Company received $5,000 of cash as a subscription for an additional 1,515,152 shares of common stock and an equal number of warrants to purchase common stock at an exercise price of $0.01 for one year. The warrants had a fair value of $4,067 based on a Black-Scholes pricing model using the following assumptions: 1) volatility of 176.37%; 2) risk free rate of 4.74%; 3) dividend yield of 0% and 4) expected term of 1 year. In February 2023, the Company received $8,000 of cash and $7,000 of expenses paid on the Company’s behalf as a subscription for 7,500,000 shares of common stock. The common shares were not yet issued as of March 31, 2023.

Common Stock Warrants

The following table summarizes the stock warrant activity for the six months ended March 31, 2023:

  Warrants Weighted-
Average
Exercise Price
Per Share		 
Outstanding, September 30, 2022  71,385,152 $0.02 
Granted  1,515,152  0.01 
Exercised  —  — 
Forfeited  —  — 
Expired  —  — 
Outstanding, March 31, 2023  72,900,304 $0.02 

As of March 31, 2023, the outstanding warrants had an expected remaining life of 2.45 years and have no aggregate intrinsic value.

Common Stock Options

The Company recognized $35,606 of expense related to the fair value of options vesting during the six months ended March 31, 2023. At March 31, 2023, the Company had $62,308 of unrecognized expenses related to options.

The following table summarizes the stock option activity for the six months ended March 31, 2023:

  Options Weighted-
Average
Exercise Price
Per Share		 
Outstanding, September 30, 2022  105,000,000 $0.02 
Granted  — $— 
Exercised  — $— 
Forfeited  — $— 
Expired  — $— 
Outstanding, March 31, 2023  105,000,000 $0.02 

As of March 31, 2023, all outstanding options had an expected remaining life of 1.36 years and have no aggregate intrinsic value.

Note 6. Series G Preferred Stock –

On August 11, 2021, our board of directors designated up to 1,000,000 shares of Series G Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series G Preferred Stock have no voting rights except on matters related specifically to the Series G Preferred Stock. The Series G Preferred Stock carries a dividend of 8%8% of the stated value per share, which is cumulative and payable upon redemption, liquidation or conversion, and increases to 22% in case of default. The Series G Preferred Stock and accrued dividends are convertible beginning 180 days from issuance at the option of the holder into shares of common stock at a rate of a conversion price of 75% of the average three lowest trading prices during the 15 days prior to conversion. The Company will be required to redeem the Series G Preferred Stock upon the earlier of 15 months from issuance date or upon on event of default as defined in the agreement.

 

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Based on the economic characteristics of the Series G Preferred Stock, the Company determined that the Series G should be accounted for as a liability under ASC 480-10, based on the discounted conversion price providing an effectively fixed monetary amount that the preferred stock is convertible into.

 

During the ninesix months ended June 30, 2022,March 31, 2023, the Company sold an aggregate of 327,25089,100 shares of Series G Preferred Stock for net cash proceeds of $275,00073,000. The Company recorded a debt discount of $52,250$16,100 for the difference between the cash proceeds and the total amount to be redeemed by the holder of $327,250.$89,100. The Company amortized $44,046$15,584 of discount related to Series G Preferred Stock for the ninesix months ended June 30, 2022.March 31, 2023. The dividends on the Series G Preferred Stock are accrued as interest. The Company recognized $12,953$3,262 of interest on the Series G Preferred Stock and had an accrued interest balance of $3,619$1,690 and $1,281$3,983 as of June 30, 2022March 31, 2023 and September 30, 2021,2022, respectively. During the six months ended June 30, 2022,March 31, 2023, the holder of the Series G converted 25,000138,875 shares of Series G and $5,555 of dividends into 5,416,66756,100,514 shares of common stock,stock. The conversions were in accordance with the terms of the agreement and the Company recognized ano gain or loss of $10,821.was recognized.

 

At June 30, 2022As of March 31, 2023 and September 30, 2021,2022, 155,37589,100 and 93,500138,875 shares of the Series G Preferred Stock were issued and outstanding, respectively.

Common The balance of the Series G Preferred stock issued for conversionliability was $76,003 and $126,294, respectively, net of convertible notes payable

During the nine months ended June 30, 2021, the Company issued 38,014,290 shares of common stock upon the conversion of principal of $200,000 and accrued interestunamortized discount of $12,180. There was no gain or loss recognized as the conversion occurred in accordance with the original terms of the agreement. There were no conversions of convertible notes during the nine months ended June 30, 2022.

Common stock issued for stock payable

In December 2021, the Company issue 19,980,00013,097 shares of common stock as part of the common stock unit sales that occurred during the year ended September 30, 2021. No shares are remaining to be issued for these unit sales.

Common Stock Warrants

The following table summarizes the stock warrant activity for the nine months ended June 30, 2022:

  Warrants  Weighted-
Average
Exercise Price
Per Share		 
Outstanding, September 30, 2021  29,970,000  $0.03 
Granted  39,900,000   0.01 
Exercised  —   — 
Forfeited  —   — 
Expired  —   — 
Outstanding, June 30, 2022  69,870,000  $0.02 

As of June 30, 2022, the outstanding warrants had an expected remaining life of 3.28 years and have no intrinsic value.

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Common stock issued for settlement of liabilities

During the nine months ended June 30, 2022, the Company issued 6,000,000 shares of common stock and 900,000 warrants for the settlement of liabilities totaling $15,000. The Company recorded a $146,46012,581 loss on settlement of liabilities related to this transaction., respectively.

Common Stock Options

As discussed in Note 4, The Company awarded common stock options to Mr. Katzaroff in connection with his amended and restated employment agreement. The Company estimated the fair value of the options to be $289,198, using the following assumptions: 1) volatility of 177.43%; 2) risk free rate of 1.3%; 3) dividend yield of 0% and 4) expected term of 5 years. The Company recognized $168,340 of expense related to the fair value of options vesting during the six months ended June 30, 2022. The Company expects to recognize an additional $90,216 of expense related to these options assuming all vest.

The following table summarizes the stock option activity for the nine months ended June 30, 2022:

  Options  Weighted-
Average
Exercise Price
Per Share		 
Outstanding, September 30, 2021  70,000,000  $0.03 
Granted  35,000,000  $0.01 
Exercised  —  $— 
Forfeited  —  $— 
Expired  —  $— 
Outstanding, June 30, 2022  105,000,000  $0.02 

As of June 30, 2022, all outstanding options had an expected remaining life of 2.11 years and have 0 intrinsic value.

Beneficial conversion feature

During the nine months ended June 30, 2021, the Company charged to additional paid-in capital the aggregate amount of $160,000 on connection with the beneficial conversion feature of notes payable.

 

Note 6.7. License Agreement

 

Effective August 23, 2020 the Company’s wholly-owned subsidiary, SomaCeuticals, Inc. entered into an exclusive global license agreement with 7 to Stand, Inc. for the rights to U.S. patent 10,610,592 issued to Fabrizio de Silvestri, Terni, Italy, as inventor, April 7, 2020 for treatment of Multiple Sclerosis. In consideration for the license agreement, SomaCeuticals agreed to pay 7 to Stand a royalty of 7.1% of the net sales of any product developed under the patent on a worldwide basis. Additionally, the Company will issue shares of common stock to 7 to Stand upon completion of the following milestones:

 

●Common shares representing 5% of total number of outstanding common shares of the Company immediately following any change of control of the Company; the Company will issueissued 29,130,167 shares of common stock as a result of the change of control discussed in Note 5. These shares were issued in July 20212021..
  
●29,130,167 Common shares immediately following the first round of funding under a private offer of equity or debt securities; These shares were issued in July 2021.
  
●29,130,167 Common shares immediately following the commencement of clinical trials for Federal Drug Administration clearance of the product; and
  
●Common shares representing an adjustment to increase 7 to Stand’s total ownership to 19.99% of total number of outstanding common shares of the Company immediately following FDA clearance of the product for sale. The Company expects to issue 29,130,166 shares of common stock related to this provision if met.
  
●$40,000 of royalties to be paid to 7 to Stand annually, on a quarterly basis. The license agreement may be terminated by 7 to Stand if 1) SomaCeuticals does not begin clinical trials within one year of the agreement; 2) if SomaCeuticals terminates the continuation of the clinical trials; or 3) shall not commence marketing the product within reasonable time after obtaining FDA approval.

 

The Company paid no royalties and accrued $23,852 of royalties and late fees during the six months ended March 31, 2023. The Company owes $50,102 of royalties and late fees under this agreement as of March 31, 2023 and $26,250 as of September 30, 2022.

The Company is currently in default of this agreement.

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The Company paid $52,000 in royalties during the nine months ended June 30, 2022 and owes $14,250 of royalties and late fees under this agreement as of June 30, 2022.

Note 7.8. Commitments

 

In February 2022, the Company entered into a consulting agreement with Spivak Management, Inc. (the “Consultant”). Under the agreement, the Consultant will provide business strategy advice and introductions to the Company firfor a period of five years unless mutually terminated sooner. Concurrently, the Consultant entered into a stock purchase agreement with the Company to purchase 6,000,000 shares of common stock for $25,000cash. The purchase and issuance of the shares willwas to be completed by June 30, 2022.2022 but has not yet occurred.

 

The Consultant will be paid a signing bonus of $25,000 upon receipt by the Company of the $25,000 cash under the stock purchase agreement described above. The Consultant will also receive the larger of $12,500 per month, or 50% of the CEO’s fixed cash compensation under the amended employment agreement described in Note 4. The Consultant may elect to receive this payment in stock.

 

The Consultant may also receive a bonus in each calendar year of the agreement equal to the larger of any bonus awarded by the Board of Directors to the Consultant or 50% of the largest bonus payable by the Company to anyone other than the Consultant. If the agreement is terminated with one year of a change of control of the Company, the Consultant will be entitled to receive a payment equal to 2.99 times the larger of the total compensation paid to the Consultant over the prior 12 month period or the average compensation paid or payable to the Consultant over the prior three years.

The Consultant also received 39,000,000 warrants with an exercise price As of $0.009 per share,March 31, 2023 and an exercise period of 5 years. The Company estimated the fair value of the warrants to be $322,266 which was recognized as general and administrative expense during the nine months ended JuneSeptember 30, 2022, using the following assumptions: 1) volatility of 254.4%; 2) risk free rate of 1.76%; 3) dividend yield of 0% and 4) expected term of 5 years. The Consultant is also entitled to additional warrants in the event of the Company issuing equity or equity equivalentsowed the consultant $162,500 and $100,000, respectively, included in the future, with the Consultant receiving an equal amount of warrants as those instruments that are issued. The exercise price of these additional warrants will be 110% of the price per equity equivalent,accounts payable and they will vest 50% immediately and the remainder over two years.accrued liabilities.

 

Note 8.9. Subsequent Events

 

Subsequent to June 30, 2022,On April 25, 2023, the holders of the Series G Preferred Stock converted a total ofCompany issued 25,000 shares and dividends of $1,000 into 9,629,6307,261,087 shares of common stock.stock to 7 to Stand to settle the outstanding royalty balance of $50,102 under the License Agreement.

 

On July 21, 2022,May 10, 2023, the holderCompany entered into a Securities Purchase Agreement (the “May 2023 Securities Purchase Agreement”) with 1800 Diagonal Lending LLC (“1800 Diagonal”). Pursuant to the terms of the Series F Preferred Stock converted May 2023 Securities Purchase Agreement, the Company agreed to issue a convertible promissory note (the “May 2023 Note”) to 1800 Diagonal in the aggregate principal amount of $128,99321,300. Effective May 10, 2023, the Company issued the May 2023 Note to 1800 Diagonal consistent with the terms of the May 2023 Securities Purchase Agreement. The May 2023 Note bears interest at 12%, with an Original Issue Discount of $1,050 and matures on May 10, 2024. Pursuant to the terms of the May 2023 Note, the outstanding principal and accrued interest on the note shall be convertible into shares of Series F into 12,899,30 shares ofthe Company’s common stock.stock as set forth therein.

 

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

 

Overview

 

GlobeStar Therapeutics Corporation (the “Company”) was incorporated on April 29, 2016. The Company’s year-end is September 30. On October 4, 2019, the Company filed Articles of Continuance with the Secretary of State of Wyoming to continue its business in the state of Wyoming. As part of these Articles of Continuance, effective October 4, 2019, the Company has no limit on the authorized shares of common stock that can be issued. The Company filed its Certificate of Dissolution with the Secretary of State of Nevada on October 21, 2019 because it is no longer a Nevada corporation.

 

We changed our name to GlobeStar Therapeutics Corporation on April 27, 2021 to better reflect our expanded platform of products that include addition of treatment for Multiple Sclerosis and other neurodegenerative diseases.

 

GlobeStar Therapeutics Corporation, based in Richland Washington, is a clinical stage Pharmaceutical Company introducing a patented formulation of previously approved drugs for the treatment of Multiple Sclerosis. GlobeStar Therapeutics owns the exclusive global license from the inventors, who are based in Italy. GlobeStar Therapeutics is initiating discussions with the FDA on clinical trial design in preparation for FDA submission and approval pathway.

 

Prior to the Company’s current business plan, the Company was a wellness company dedicated to bringing innovative, effective and high-quality supplement products to the medical, wellness and adult-use markets through our marketing subsidiary, SomaCeuticalsTM.

 

Professional Team

 

We have adopted a Medical Advisory Board and appointed medical doctors and medical professionals that have extensive education and hands on experience with pharmaceutical and nutraceutical solution for prevention and treatment of disease.

 

Management’s Plan to Attract Capital

 

In the near term, management will utilize equity and debt financing to complete assembling the professional and management team to commence the process for clinical trials in compliance with FDA protocol. plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

 

In the midterm, management will enhance its capital position with a public offering of equity securities to finance clinical trials and the necessary actions to obtain approval of worldwide marketing of our MS treatment.

 

In the long term, marketing the Company’s pharmaceutical and nutraceutical products will provide the necessary cash flow to support future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of capital to support near term and midterm business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to support its operations.

 

Corporate Governance

 

We have adopted codes and committees for governance of the corporation that include: (i) audit committee charter, (ii) written acknowledgement of code of ethics for directors and senior officers, (iii) compensation committee charter, (iv) confidential information policy, iv) corporate governance guidelines, (vi) executive committee charter, and (vii) nominating committee charter.

 

Critical Accounting Policies

 

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the consolidated financial statements are prepared. We regularly review our accounting policies, and how they are applied and disclosed in our consolidated financial statements.

 

While we believe that the historical experience, current trends and other factors considered support the preparation of our consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

 

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Results of Operations

 

Three Months Ended June 30, 2022March 31, 2023 Compared to the Three Months Ended June 30, 2021March 31, 2022

 

Revenue. We had no revenue for the three months ended June 30, 2022March 31, 2023 and 2021.2022.

 

Cost of goods sold. We had no cost of goods sold for the three months ended June 30, 2022March 31, 2023 and 2021.2022.

 

General and administrative expense. We recognized general and administrative expense of $136,618$142,059 for the three months ended June 30, 2022March 31, 2023 compared to $4,478,111$662,310 for the comparable period of 2021.2022. The decrease in general and administrative expense was primarily related primarily todecreases in in stock-based compensation in the three months ended June 30, 2021 of $4,209,179March 31, 2023 related to options issued to officers, directorsan officer and advisory board members, partially offset by increased officer compensation of relatedwarrants issued to new officers.

Loss on settlement of liabilities and conversion of preferred stock liability. We recognized $0 and $5,438 loss on the settlement of liabilities during the three months ended June 30, 2022 and 2021. The loss was related to the severance agreement with Alex Blankenship, our former CEO. The Company also recognized a loss of $10,821 on conversion of the preferred stock liability during the three months ended June 30, 2022.consultant. 

 

Interest expense. We recognized interest expense of $10,664$8,178 for the three months ended June 30, 2022March 31, 2023 compared to $34,949$26,248 for the comparable period of 2021,2022, including amortization of the discount on convertible notes payableSeries G Preferred Stock liability of $8,629$6,241 and $32,452$19,664 during the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively.

 

Net loss. For the reasons above, we recognized a net loss of $158,103$150,237 for the three months ended June 30, 2022March 31, 2023 compared to $4,518,498$688,558 for the three months ended June 30, 2021.March 31, 2022.

 

NineSix Months Ended June 30, 2022March 31, 2023 Compared to the NineSix Months Ended June 30, 2021March 31, 2022

 

Revenue.We had no revenue of $0 for the ninesix months ended June 30, 2022March 31, 2023 and June 30, 2021.2022.

 

Cost of goods sold. We had no cost of goods sold of $0 for the ninesix months ended June 30, 2022 compared to $2,412 for the nine months ended June 30, 2021 which were related to the write down of inventory kept by the Company’s former CEO as part of the severance agreement.March 31, 2023 and 2022.

 

General and administrative expense.  We recognized general and administrative expense of $965,222$297,300 for the ninesix months ended June 30, 2022March 31, 2023 compared to $5,006,455$828,604 for the comparable period of 2021.2022. The decrease in general and administrative expense was primarily related primarily to stock-based compensation of $4,209,179 during the nine months ended June 30, 2022, compared to $168,340 related to stock options for officers and medical advisory board members and $325,000$154,095 related to the Series E Preferred stockoptions issued to the new CEO partially offset by increased officer compensation of $37,500,in 2022, $322,266 related to new officerswarrants issued to a consultant, decrease in legal fees of $69,620 and a decrease in royalty expense of $66,250.$32,399.

 

Loss on settlement of liabilities.  We recognized $146,460$0 and $317,200$146,460 loss on the settlement of liabilities during the ninesix months ended June 30,March 31, 2023 and 2022. In 2022, the loss was related the issuance of 6,000,0000 shares of common stock and 2021. The loss in the current period related to900,000 warrants for the settlement of advances of $15,000. The loss in the prior period was related to the severance agreement with Alex Blankenship, our former CEO, resulting in a $317,200 loss. The Company also recognized a loss of $10,821 on conversion of the preferred stock liability during the three months ended June 30, 2022.liabilities.

 

Interest expense.  We recognized interest expense of $56,999$18,846 for the ninesix months ended June 30, 2022March 31, 2023 compared to $212,657$46,335 for the comparable period of 2021.2023. The decrease was due primarily to the amortization of the discount related to Series G Preferred stock liabilityon convertible notes payable during the current period in the amount of $44,046$15,584 compared to $201,636 of amortization related to convertible notes payable$35,417 during the comparable period of the prior year.

 

Net loss.  For the reasons above, we recognized a net loss of $1,179,502$316,146 for the ninesix months ended June 30, 2022March 31, 2023 compared to $5,538,724$1,021,399 for the ninesix months ended June 30, 2021.March 31, 2022.

 

Liquidity and Capital Resources

 

At June 30, 2022,March 31, 2023, we had cash on hand of $12.$176. The Company has negative working capital of $966,466.$1,290,670. Net cash used in operating activities for the ninesix months ended June 30, 2022March 31, 2023 was $288,348.$92,889. Cash on hand is not adequate to fund our operations for less than twelve months. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of June 30, 2022.March 31, 2023.

During the six months ended March 31, 2023 the net loss of $316,146 was offset by the following non-cash operating expenses: stock compensation, related parties of $35,606, amortization of discount of $15,584 resulting in cash flows used in operating activities of $92,889. The Company had cash flows from financing activities of $86,700, primarily due to $73,000 from the proceeds of sale of Series G Preferred Stock, $13,000 in proceeds from the common stock subscribed and $700 of related party advances.

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During the nine months ended June 30, 2022, the net loss of $1,1709,502 was offset by the following non-cash operating expenses: stock compensation of $322,266, stock compensation, related parties of $168,340, amortization of discount of $44,046, loss on conversion of preferred stock liability of $10,821 and loss on the settlement of liabilities of $146,460, resulting in cash flows used in operating activities of $288,348. . The Company had cash flows from financing activities of $282,400, primarily due to $275,000 from the proceeds of sale of Series G Preferred Stock and $23,900 of related party advances, partially offset by repayment of those advances of $16,500.

 

Additional Financing

 

Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.

 

Off Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to a smaller reporting company.

 

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

 

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2022.March 31, 2023. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2022,March 31, 2023, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

1.As of June 30, 2022,March 31, 2023, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
  
2.As of June 30, 2022,March 31, 2023, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

 

Our management, including our principal executive officer and principal financial officer do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

 

Change in Internal Controls Over Financial Reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

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PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

 

ITEM 1A. RISK FACTORS

 

Not applicable to a smaller reporting company.

 

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

 

Set forth below is information regarding the securities sold during the quarter ended June 30, 2022March 31, 2023 that were not registered under the Securities Act:

 

Date of Sale Title of
Security		 Number
Sold		 Consideration Received
and Description of
Underwriting or Other
Discounts to Market
Price or Convertible
Security, Afforded to
Purchasers		 Exemption from
Registration
Claimed		 If Option,
Warrant or
Convertible
Security, terms
of exercise
or conversion
           
April 4, 2022 Common Stock 4,078,431 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0051
April 6, 2022 Common Stock 5,709,804 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0051
April 18, 2022 Common Stock 4,180,392 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0051
April 26, 2022 Common Stock 6,240,000 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0050
May 2, 2022 Common Stock 9,484,091 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0044
May 12, 2022 Common Stock 7,428,571 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0028
June 2, 2022 Common Stock 7,800,000 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0020
June 17, 2022 Common Stock 7,800,000 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0020
June 2, 2022 Common Stock 4,745,000 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0020
June 24, 2022 Common Stock 7,428,571 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0021
June 29, 2022 Common Stock 13,680,952 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0021
Date of Sale Title of
Security		 Number
Sold		 Consideration Received
and Description of
Underwriting or Other
Discounts to Market
Price or Convertible
Security, Afforded to
Purchasers		 Exemption from
Registration
Claimed		 If Option,
Warrant or
Convertible
Security, terms
of exercise
or conversion
           
October 4, 2022 Common Stock 7,090,909 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0022
October 13, 2022 Common Stock 7,090,909 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0022
October 18, 2022 Common Stock 8,976,190 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0021
November 10, 2022 Common Stock 10,947,368 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0019
November 14, 2022 Common Stock 13,928,571 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0021
February 23, 2023 Common Stock 4,078,431 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0051
February 27, 2023 Common Stock 3,988,136 Conversion of Series G Preferred Stock Section 3(a)(9) of the Securities Act $0.0059

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The Company has not defaulted upon senior securities.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

This item is not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

3.1Articles of Incorporation (1)
3.2Bylaws (2)
14.1Code of Ethics (3)
31.1Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer (4)
31.2Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer (4)
32.1Section 1350 Certification of principal executive officer (4)
32.2Section 1350 Certification of principal financial officer (4)
101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. (5)
101.SCHInline XBRL Taxonomy Extension Schema Document (5)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (5)
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (5)
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (5)
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (5)

__________

(1)Incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed on April 8, 2015.
(2)Incorporated by reference to our Form 10-K/A Amendment No. 1 for the year ended September 30, 2015 filed on January 22, 2016.
(3)Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on November 3, 2010.
(4)Filed or furnished herewith.
(5)In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

 

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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.

 

 GlobeStar Therapeutics Corporation
  
Date: August 23 2022May 30, 2023By: /s/ James C. Katzaroff
 James C. Katzaroff
 Chief Executive Officer, President, Secretary, Principal Executive Officer and Director
  
Date: August 23, 2022May 30, 2023By: /s/ Robert Chicoski
 Robert Chicoski
 Chief Financial Officer, Treasurer, Secretary, Principal Financial and Accounting Officer

 

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