Star Alliance International Corp. - Quarter Report: 2023 March (Form 10-Q)

Table of Contents

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 March 31, 2023

or

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

Commission File Number: 333-197692

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:

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.

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: 209,959,543 shares of common stock par value $0.001, were outstanding as of May 18, 2023.

STAR ALLIANCE INTERNATIONAL CORP.

FORM 10-Q

Quarterly Period Ended March 31, 2023

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

STAR ALLIANCE INTERNATIONAL CORP.

BALANCE SHEETS

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

STAR ALLIANCE INTERNATIONAL CORP.

STATEMENTS OF OPERATIONS (UNAUDITED)

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

STAR ALLIANCE INTERNATIONAL CORP.

STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2023

(Unaudited)

STAR ALLIANCE INTERNATIONAL CORP.

STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022

(Unaudited)

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

STAR ALLIANCE INTERNATIONAL CORP.

STATEMENTS OF CASH FLOWS

(Unaudited)

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

STAR ALLIANCE INTERNATIONAL CORP.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2023

NOTE 1 – NATURE OF BUSINESS

Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada, for the purpose of acquiring and developing gold mining as well as certain other mining properties worldwide.

NOTE 2 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES

Basis of Presentation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of operations for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Form 10-K for the fiscal year ended June 30, 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:

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.

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2023:

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 $25,001,820 as of March 31, 2023. For the nine months ended March 31, 2023, the Company had a net loss of $9,943,420, which did include $9,345,287 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 $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.

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 January 1, 2022, the Company acquired 51% of the capital stock of Compania Minera Metalurgica Centro Americana (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 shares of the Company’s common 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. As the result of this acquisition, the Company now owns the mining rights to five operating mines that run along a 12.5-mile stretch of the Rio Jalan River that are being prepared for production. As of the date of this report, the Company is not in compliance with its obligations under the Share Exchange Agreement, since it issued to Mr. Lemus only 200,000 shares of Common Stock of the Company and paid $75,000 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 was to be used for the growth of the four mines. This transaction was due to close early 2023 and 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

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 was due to close early 2023. All exploration work has been completed and production was anticipated 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 funding for the project.

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 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:

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.

NOTE 5 – 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.

Assets stated at cost, less accumulated depreciation consisted of the following:

Once operations utilizing the property and equipment have begun, the Company will begin depreciation of the assets.

NOTE 6 – RELATED PARTY TRANSACTIONS

On January 1, 2021, the Company amended employment agreements for Richard Carey and Anthony Anish, which increased their base annual salary for Mr. Carey from $120,000 to $180,000 and for Mr. Anish from $60,000 to $120,000 per annum respectively.

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:

Under the terms of the New Employment Agreement, Mr. Anish is entitled to receive s the following compensation:

As of March 31, 2023, the Company has accrued compensation due to Mr. Carey of $86,263 and Mr. Anish of $152,375. As of June 30, 2022, the Company has accrued compensation due to Mr. Carey of $52,600 and 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.

On August 15, 2022, the Company issued 5,000,000 shares of common stock Fernando Godina, Director, for services. The shares were valued at $0.289 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 5,000,000 shares of common stock Bryan Cappelli, Director, for services. The shares were valued at $0.289 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 5,000,000 shares of common stock to Weverson Correia, CEO and Director, for his services as the CEO. The shares were valued at $0.289 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 5,000,000 shares of common stock to Anthony Anish, CFO and director, for services as CFO. The shares were valued at $0.289 per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.

On November 17, 2022, Mr. Carey agreed to give 4 million of his own shares of common stock in exchange for $42,000 which was loaned to the Company. The loan is non-interest bearing and due on demand.

On December 5, 2022, the Company issued 1,000,000 shares of common stock Themis Caldwell, Director, for services. The shares were valued at $0.165 per share, the closing stock price on the date of grant, for total non-cash expense of $165,000.

NOTE 7 – NOTES PAYABLE

As of March 31, 2023 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 March 31, 2023 and June 30, 2022, there is $7,762 and $6,562, respectively, of accrued interest due on the note. The note is past due and in default.

As of March 31, 2023 and June 30, 2022, the Company owes various other individuals and entities $77,400 and $119,215, respectively. All the loans are non-interest bearing and due on demand.

NOTE 8 - 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% 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:

A summary of the activity of the derivative liability for the notes above is as follows:

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 March 31, 2023, is as follows:

NOTE 9 – PREFERRED STOCK

Of the 25,000,000 shares of the Company's authorized Preferred Stock, $0.001 par value per share, 1,000,000 are designated Series A preferred stock, 1,900,000 shares are designated as Series B Preferred Stock and 1,000,000 shares are designated Series C preferred stock.

Series A Preferred Stock

Each Share of Series A preferred stock has 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 1,000,000 shares of the Series A preferred stock to the Company’s Chairman and CEO, Richard Carey, in conversion of $68,556 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 has 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 1,883,000 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.

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 1,000,000 shares of Series C Preferred Stock (“Series C”) with a stated value of $1.00. The Series C has an annual cumulative dividend of 8%, 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 nine months ended March 31, 2023, the Company sold 268,200 shares of Series C to Geneva Roth Remark Holdings Inc for total proceeds of $268,200.

During the nine months ended March 31, 2023, Geneva Roth converted 254,000 shares of Series C preferred stock into 13,605,783 shares of common stock. The Company recognized a loss on conversion of $911,109.

NOTE 10 – COMMON STOCK

During the nine months ended March 31, 2023, the Company sold 50,000 shares of common stock for total cash proceeds of $6,250. The funds have not been received as of March 31, 2023.

During the nine months ended March 31, 2023, Fast Capital converted $115,000 of its note payable along with $7,414 of accrued interest into 9,050,618 shares of common stock.

During the nine months ended March 31, 2023, the Company issued 2,025,000 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 1,000,000 commitment shares to Keystone. The shares were valued at $0.016, 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 11 – 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.

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.

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.

The Company then focused its business plan on the pursuit of precious metals mining, and on acquiring highly specialized, environmentally safe and patented technologies for the extraction of 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.

On August 13, 2019, Star acquired 78 mining claims from 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.

On 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.

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:

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:

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:

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.

Results of Operations for the Three Months Ended March 31, 2023 as Compared to the Three Months Ended March 31, 2022

Operating expenses

General and administrative expenses (“G&A”) were $80,556 for the three months ended March 31, 2023, compared to $199,558 for the three months ended March 31, 2022, a reduction of $119,002. The reduction was mainly due to much smaller overheads for the Troy mine as no work was performed during this quarter.

Professional fees were $22,130 for the three months ended March 31, 2023, compared to $93,500 for the three months ended March 31, 2022, an reduction of $71,370. Professional fees consist mainly of legal, accounting and audit expense. The decrease in the current period is due to reductions in legal fees during the period

Consulting fees were $16,500 for the three months ended March 31, 2023, compared to $3,827,475 for the three months ended March 31, 2022. The reduction of $3,810,975 was mainly due to a reduction in non cash expenses for consultants during the earlier period.

Director compensation was $60,000 and $1,469,000 for the three months ended March 31, 2023 and 2022, respectively. Our Chairman signed a new employment agreement on March 15, 2023 and 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 was $45,000 and $817,500 for the three months ended March 31, 2023and 2022 respectively. Our Chief Financial Officer signed a new employment agreement on March 15, 2023 and 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 three months ended March 31, 2023 and 2022, we had interest expense of $56,151 and $6,780, respectively.

Net Loss

Net loss for the three months ended March 31, 2023 was $384,009 compared to $8,016,068 for the three months ended March 31, 2022. The large decrease 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.

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 $25,001,820 as of March 31, 2023. For the nine months ended March 31, 2023, the Company had a net loss of $9,943,420, which did include over $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 ($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 $(405,769) during the three months ended March 31, 2023, compared to $(1,424,871) in the three months ended March 31, 2022. We had a loss on conversion of preferred stock in the amount of $97,249.

Net cash provided by financing activities was $337,652 and $1,589,315 for the three months ended March 31, 2023 and 2022, respectively. In the current period we received $261,200 from the sale of preferred stock.

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 our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout management's Discussion and Analysis or Plan of Operation where such policies affect our reported and expected financial results. Note that our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

This item is not applicable as we are currently considered a smaller reporting company.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (SEC) rules and forms, and that such information is accumulated and communicated to our management, including our 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 nine months ended March 31, 2023 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.

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.