FTSP 10-Q
FinTrade Sherpa, Inc. (FTSP)
| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
FORM
| QUARTERLY
REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices, including zip code.)
(Telephone number, including area code)
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | o | Accelerated Filer | o |
| o | 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. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: at August 15, 2022.
1
TABLE OF CONTENTS
2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LODE-STAR MINING INC.
INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
3
LODE-STAR MINING INC.
BALANCE SHEETS
(Unaudited)
| JUNE 30 | DECEMBER 31 | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid fees | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related parties and accrued interest | ||||||||
| Total current liabilities | ||||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Capital Stock | ||||||||
| Authorized: voting common shares and preferred shares; Issued: common shares and preferred shares at June 30, 2022; common shares and preferred shares at December 31, 2021 | ||||||||
| Shares To Be Issued – Series A convertible preferred shares | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficiency | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficiency | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited interim financial statements.
4
LODE-STAR MINING INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||
| JUNE 30 | JUNE 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Consulting services | ||||||||||||||||
| Corporate support services | ||||||||||||||||
| Exploration and evaluation | ||||||||||||||||
| Mineral option fees | ||||||||||||||||
| Office, foreign exchange and sundry | ( | ) | ( | ) | ||||||||||||
| Professional fees | ||||||||||||||||
| Transfer and filing fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Expenses | ||||||||||||||||
| Interest, bank and finance charges | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Rescinded Sapir transaction | ||||||||||||||||
| Total Other Expenses | ( | ) | ( | ) | ||||||||||||
| Net Income (Loss) and Comprehensive Income (Loss) For The Period | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Basic And Diluted Net Income (Loss) Per Common Share | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted Average Number of Common Shares Outstanding – Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited interim financial statements.
5
LODE-STAR MINING INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| SIX MONTHS ENDED | ||||||||
| JUNE 30 | ||||||||
| 2022 | 2021 | |||||||
| Operating Activities | ||||||||
| Net income (loss) for the period | $ | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Foreign exchange loss | ||||||||
| Rescinded Sapir Transaction | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Accrued mineral option fees | ||||||||
| Accrued interest payable | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Financing Activities | ||||||||
| Proceeds from loans payable – related parties | ||||||||
| Net cash provided by financing activities | ||||||||
| Net Decrease In Cash | ( | ) | ||||||
| Cash, Beginning of Period | ||||||||
| Cash, End of Period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash Financing Activity | ||||||||
| Expenses paid by related party on behalf of the Company | $ | $ | ||||||
| Reinstated debt | ||||||||
| Shares issued to shareholder to settle debt | ||||||||
The accompanying notes are an integral part of these unaudited interim financial statements.
6
LODE-STAR MINING INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
| NUMBER OF COMMON SHARES | PAR VALUE | SHARES TO BE ISSUED | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | TOTAL | |||||||||||||||||||
| Balance, January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Rescinded Sapir Transaction | - | ( | ) | ( | ) | |||||||||||||||||||
| Reinstated debt | - | ( | ) | ( | ) | |||||||||||||||||||
| Shares issued to shareholder to settle debt | ||||||||||||||||||||||||
| Net income for the period | - | |||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| NUMBER OF COMMON SHARES | PAR VALUE | SHARES TO BE ISSUED | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | TOTAL | |||||||||||||||||||
| Balance, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Shares issued on cashless exercise of stock options | ( | ) | ||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
The accompanying notes are an integral part of these unaudited interim financial statements.
7
LODE-STAR MINING INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| 1. | BASIS OF PRESENTATION AND NATURE OF OPERATIONS |
Lode-Star Mining Inc. (the “Company”) was incorporated in the State of Nevada on December 9, 2004 for the purpose of acquiring and exploring mineral properties. The Company’s principal executive offices are located in Reno, Nevada.
On January 14, 2022, the Company formally returned its 20% undivided interest in the Goldfield Bonanza Project to Lode Star Gold, Inc., the optionor of that property (“LSG”), pursuant to a settlement and termination agreement (the “Settlement Agreement”).
On December 28, 2021, the Company acquired from Sapir Pharmaceuticals, Inc., a Delaware corporation (“Sapir”), all of the assets used in connection with the proprietary stabilized formulation of the Epigallocatechin-gallate (EGCG) molecule for further pharmaceutical development. On June 6, 2022, the Company and Sapir agreed to rescind the acquisition due to circumstances beyond either party’s control. In connection with the rescission, the Company reinstated $2,246,146 in debt owed to LSG that was previously forgiven under the Settlement Agreement in order to facilitate the Sapir transaction.
On June 21, 2022 the Company, LSG and certain related party creditors agreed to convert an aggregate of $2,601,207 in debt owed to those parties into 70,302,906 shares of the Company’s common stock at a price of $0.037 per share.
Going Concern
The
accompanying unaudited interim financial statements have been prepared assuming the Company will continue as a going concern. The future
of the Company is dependent upon its ability to identify and establish a business and to obtain new financing to execute its business
plan. As shown in the accompanying financial statements, the Company has had no revenue and has incurred accumulated losses of $
Basis of Presentation
The unaudited interim financial information furnished herein reflects all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s report on Form 10-K for the year ended December 31, 2021. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the year ended December 31, 2021, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, certain footnote disclosures, which would substantially duplicate the disclosures contained in the Company’s financial statements for the fiscal year ended December 31, 2021, have been omitted. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of results for the entire year ending December 31, 2022.
8
LODE-STAR MINING INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. All dollar amounts are in U.S. dollars unless otherwise noted. The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality.
The Company has implemented all applicable new accounting pronouncements that are in effect. Those pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| 3. | PHARMACEUTICAL DEVELOPMENT PROJECT |
On December 28, 2021, the Company entered into an asset purchase agreement with Sapir (the “Purchase Agreement”), pursuant to which the Company acquired all of the assets of Sapir used in connection with the proprietary stabilized formulation of the Epigallocatechin-gallate (EGCG) molecule for further pharmaceutical development (the “Assets”). The consideration to be paid by the Company for the Assets was shares of Series A Convertible Preferred Stock (the “Preferred Stock”) nominally valued at $1.00 per share (to be issued). Each share of Preferred Stock entitled Sapir to 450 votes per share and was convertible into 450 shares of the Company’s common stock.
The
Company recorded the transaction as an asset acquisition as management concluded that all of the gross value received was related to
the Assets. The fair value of the assets acquired was estimated to be $
On June 6, 2022, the Company and Sapir entered an agreement to rescind the acquisition due to circumstances beyond either party’s control. As a result, the Company recognized a recovery of $2,186,917 during the six months ended June 30, 2022 (2021 - $Nil) representing the reversal the fair value of the Preferred Stock that was to be issued to Sapir in accordance with the Purchase Agreement.
| 4. | CAPITAL STOCK |
Capitalization
The authorized capital of the Company is 500,000,000 shares of capital stock, divided into shares of common stock with a par value of $ per share, and shares of preferred stock with a par value of $ per share. The Company reserved 10,000,000 shares of common stock for issuance under its 2016 Omnibus Equity Incentive Plan. The Company has issued common shares and preferred shares. During the three months ended June 30, 2022, the Company issued shares of common stock pursuant to debt conversion agreements with LSG and certain related party creditors in the aggregate amount of $.
9
LODE-STAR MINING INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| 4. | CAPITAL STOCK (Continued) |
Options
| Options Outstanding | Weighted Average Life Remaining (Years) | Intrinsic Value | ||||||||||
| Balance December 31, 2021 | 0.20 | $ | ||||||||||
| Expired | ( | ) | ||||||||||
| Balance June 30, 2022 | - | $ | ||||||||||
All 9,950,000 options issued and outstanding expired on February 22, 2022.
| 5. | RELATED PARTY TRANSACTIONS AND AMOUNTS DUE |
During the period ended June 30, 2022, the Company terminated its mineral option agreement with LSG and entered in the Settlement Agreement, with the result that the Company returned its 20% undivided interest in and to the Goldfield Bonanza Project to LSG, the Company’s majority shareholder. In exchange, LSG agreed to forgive all the amounts owing by the Company to LSG under the option agreement, which included principal and interest amounts totaling $2,246,146.
During the period ended June 30, 2022, as a result of the rescission agreement with Sapir, the Company entered a debt reinstatement agreement with LSG whereby $2,246,146 of debt was reinstated by the Company to be subsequently settled via the issuance of common stock. The resulting loss from the reinstatement of debt was recognized within stockholders’ deficiency.
During the period ended June 30 2022, the Company had the following transactions with related parties:
| i) | During the period ended June 30, 2022, the Company received $24,025 in bridge loan vendor financing and $52,315 in bridge loan direct financing. The loans had no specific terms of repayment and were non-interest bearing; |
| ii) | During
the period ended June 30, 2022, the Company incurred $ |
| iii) | On June 21 , 2022, the Company converted $2,322,487 in bridge loan vendor financing, bridge loan direct financing and reinstated debt owed to LSG into 62,769,918 shares of common stock with a fair value of $2,322,487; |
| iv) | On June 8, 2022, the Company converted $42,942 in debt owed to the controlling shareholder of LSG into 1,160,583 shares of common stock with a fair value of $42,942. |
| v) | On June 8, 2022, the Company converted $235,779 in past due compensation owed to the Company’s CEO and President into 6,372,405 shares of common stock with a fair value of $235,779. |
10
LODE-STAR MINING INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| 5. | RELATED PARTY TRANSACTIONS AND AMOUNTS DUE (Continued) |
At June 30, 2022, the Company had the following amounts due to related parties:
| i) | $ |
| ii) | $Nil (December 31, 2021: $Nil) in bridge loan direct financing; with no specific terms of repayment, due to LSG, the Company’s majority shareholder with no accrued interest payable; |
| iii) | $Nil
(December 31, 2021: $ |
| iv) | $Nil
(December 31, 2021: $ |
At June 30, 2022, total interest accrued on the above related party loans was $Nil (December 31, 2021: $3,584).
During the period ended June 30, 2022, the Company incurred $Nil (2021: $25,012) in mineral option fees payable to LSG.
During
the period ended June 30, 2022, there was a $
At
June 30, 2022, $Nil (December 31, 2021: $
| 6. | FINANCIAL INSTRUMENTS |
ASC Topic 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. These tiers include:
| ■ | Level 1 – defined as observable inputs such as quoted prices in active markets; |
| ■ | Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
| ■ | Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The Company’s financial instruments consist of cash, accounts payable and accrued liabilities, and due to related parties. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Accounts payable and accrued liabilities and amounts due to related parties are measured using “Level 2” inputs as there are no quoted prices in active markets for identical instruments. The carrying values of cash, accounts payable and accrued liabilities, and amounts due to related parties approximate their fair values due to the immediate or short-term maturity of these financial instruments.
11
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes appearing elsewhere in this quarterly report. In addition to historical financial information, the following discussion includes certain forward-looking statements that reflect our plans, estimates and our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
New Business
On December 28, 2021, we entered into an asset purchase agreement (the “Purchase Agreement”) with Sapir Pharmaceuticals, Inc., a Delaware corporation (“Sapir”), pursuant to which we purchased certain assets from Sapir used in connection with the proprietary stabilized formulation of the Epigallocatechin-gallate (EGCG) molecule (the “Business”) in exchange for 1,000,000 shares of newly-designated Series A preferred stock (the “Preferred Stock”). The closing of the acquisition occurred simultaneous with the execution and delivery of the Purchase Agreement.
At the closing, the parties also executed and delivered a royalty agreement (the “Royalty Agreement”) pursuant to which we agreed to pay Sapir a royalty equal to 5% of the gross revenues realized from licenses or products generated or derived from the Business.
Due to circumstances beyond the control of the parties, we were unable to develop the Business to the extent contemplated by (i) the Purchase Agreement and the Royalty Agreement (together, the “Sapir Agreements”) and (ii) discussions that occurred between us and Sapir following the closing of the Purchase Agreement. As a result, on June 6, 2022, we entered into a rescission agreement with Sapir (the “Rescission Agreement”) in order to rescind the Purchase Agreement and the Royalty Agreement and restore both us and Sapir to the respective positions we occupied immediately in advance of the execution and delivery of the Sapir Agreements.
As of the date of the Rescission Agreement, we had not completed the issuance of the Preferred Stock to Sapir or completed any payments to Sapir under the Royalty Agreement.
In connection with the Sapir transaction, on January 14, 2022, we entered into a settlement and termination agreement (the “Settlement Agreement”) with Lode Star Gold, Inc., a private Nevada corporation and our former controlling shareholder (“LSG”), in order to terminate the mineral option agreement between the parties dated October 4, 2014, as amended on October 31, 2019 (together, the “Option Agreement”). The Settlement Agreement provided for the immediate termination of the Option Agreement (with the exception of certain standard provisions that survived according to their terms); the forgiveness by LSG of all amounts owing by us to LSG thereunder, which includes approximately $2.224 million in accrued, unpaid penalty and other payments (collectively, the “Debt”); and the return to LSG of our 20% undivided interest in and to the mineral property that was the subject of the Option Agreement.
On June 8, 2022, and in connection with the rescission of the Sapir Agreements, we entered into a debt reinstatement agreement (the “Reinstatement Agreement”) with LSG pursuant to which we agreed to reinstate the Debt. Also on June 8, 2022, we entered into debt conversion agreements with three related parties, including LSG, pursuant to which the creditors converted an aggregate of $2,601,207.55 in accrued, unpaid debt into 70,302,906 shares of our common stock at a price of $0.037 per share.
Funding
At present we have no sustainable financing in place other than remedial expenses still being advanced by LSG.
12
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) |
Personnel
We have no employees. Apart from quarterly consulting fees, our President and CEO, Mark Walmesley, receives no compensation for his services. We expect to continue to use outside consultants, advisors, attorneys and accountants as necessary.
Our CFO and Corporate Secretary, Samuel Sternheim, also receives no compensation for his services.
Going Concern
There is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our expenses. This is because we have not generated any revenues to-date and we cannot currently estimate the timing of any possible future revenues. Our only source of cash at this time is from loans.
Results of Operations
The following summary of our results of operations should be read in conjunction with our financial statements for the period ended June 30, 2022 which are included above in Part I, Item 1.
| Three Months Ended June 30 | Change | |||||||||||||||
| 2022 | 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Revenue | - | - | - | - | ||||||||||||
| Operating Expenses | 99,546 | 82,788 | 16,758 | 20 | % | |||||||||||
| Operating Loss | (99,546 | ) | (82,788 | ) | (16,758 | ) | 20 | % | ||||||||
| Other Income (Expense) | 2,186,682 | (24,257 | ) | 2,210,939 | 9,115 | % | ||||||||||
| 2,087,136 | (107,045 | ) | 2,194,181 | 2,050 | % | |||||||||||
| Six Months Ended June 30 | Change | |||||||||||||||
| 2022 | 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Revenue | - | - | - | - | ||||||||||||
| Operating Expenses | 132,893 | 186,918 | 54,025 | (29 | %) | |||||||||||
| Operating Loss | (132,893 | ) | (186,918 | ) | (16,758 | ) | (29 | %) | ||||||||
| Other Income (Expense) | 2,186, 110 | (47,007 | ) | 2,233,117 | 4,750 | % | ||||||||||
| 2,053,217 | (233,925 | ) | 2,194,181 | 938 | % | |||||||||||
Revenues
We had no operating revenues during the three-month and six-month periods June 30, 2022 and 2021. We recorded a net income of $2,186,682 for the current quarter (2021: 47,007 net loss).
Expenses
Notable year over year differences in expenses for the second quarter in 2022 compared to 2021 are as follows:
| Three Months Ended June 30 | Increase/(Decrease) | |||||||||||||||
| 2022 | 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Consulting services | 52,074 | 31,187 | 20,867 | 67 | % | |||||||||||
| Exploration and evaluation | - | 13,158 | (13,158 | ) | (100 | %) | ||||||||||
| Mineral option fees | - | 25,012 | (25,012 | ) | (100 | %) | ||||||||||
| Professional fees | 45,164 | 7,953 | 37,211 | 468 | % | |||||||||||
| Interest, bank and finance charges | 235 | 24,257 | (24,022 | ) | (99 | %) | ||||||||||
13
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) |
Consulting services expense was higher during the second quarter of 2022 primarily due a late recorded invoice from the previous quarter.
Exploration and evaluation expense and mineral option fees were reduced to $Nil in the first quarter of 2022 due to the Company terminating its mineral property option and no longer spending on mining efforts.
Professional fees in the second quarter of 2022 included legal and bookkeeping were increased as the Company paid its OTC Markets annual fee and continued to restructure itself following the rescinding of the Sapir Pharmaceutical transaction.
Interest, bank and finance charges were lower primarily due to the write down in loans from LSG and other related parties.
Notable year over year differences in expenses for the six month period ended June 30, 2022 compared to 2021 are as follows:
| Six Months Ended June 30 | Increase/(Decrease) | |||||||||||||||
| 2022 | 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Exploration and evaluation | - | 20,689 | (20,689 | ) | (100 | %) | ||||||||||
| Mineral option fees | - | 49,988 | (49,988 | ) | (100 | %) | ||||||||||
| Professional fees | 52,254 | 7,953 | 44,301 | 557 | % | |||||||||||
Consulting services expense was higher during the second quarter of 2022 primarily due a late recorded invoice from the previous quarter.
Exploration and evaluation expense and mineral option fees were reduced to $Nil in the six month period ended June 30, 2022 due to the Company terminating its mineral property option and no longer spending on mining efforts.
Professional fees in the six month period ended June 30, 2022 included legal and bookkeeping were increased as the Company paid its OTC Markets annual fee and continued to restructure itself following the rescinding of the Sapir Pharmaceutical transaction.
Balance Sheets at June 30, 2022 and December 31, 2021
Items with notable period-end differences are as follows:
| Change | ||||||||||||||||
| June 30, 2022 | December 31, 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Cash | 561 | 6,008 | (5,447 | ) | (91 | %) | ||||||||||
| Accounts payable and accrued liabilities | 4,339 | 190,394 | (186,055 | ) | (98 | %) | ||||||||||
| Due to related parties and accrued interest | 720 | 41,473 | (40,753 | ) | (98 | %) | ||||||||||
Accounts payable, accrued liabilities along with monies due to related parties and accrued interest were lower due to the issuance of 70,302,906 shares of common stock pursuant to the conversion of a total of $2,601,207 in debt owed to LSG and other related parties.
14
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) |
Liquidity and Capital Resources
At June 30, 2022, our total assets were $834 and our total liabilities were $5,059. Our working capital deficiency at June 30, 2022 and December 31, 2021 and the changes between those dates were as follows:
| Increase/(Decrease) | ||||||||||||||||
| June 30, 2022 | December 31, 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Current Assets | 834 | 6,281 | (5,447 | ) | (87 | %) | ||||||||||
| Current Liabilities | 5,059 | 231,867 | (226,808 | ) | (98 | %) | ||||||||||
| Working Capital Deficiency | (4,225 | ) | (225,586 | ) | (221,361 | ) | 98 | % | ||||||||
The decrease in our working capital deficiency from December 31, 2021 to June 30, 2022 was primarily due to the issuance of 70,302,906 shares of common stock pursuant to the conversion of a total of $2,601,207 in debt owed to LSG and other related parties following the reinstatement of related party debt balances of $2,246,136.
Cash Flows
| Six Months Ended June 30 | Increase/(Decrease) | |||||||||||||||
| 2022 | 2021 | Amount | Percentage | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Cash Flows Provided By (Used In): | ||||||||||||||||
| Operating Activities | (57,762 | ) | (44,094 | ) | (13,668 | ) | (31 | %) | ||||||||
| Financing Activities | 52,315 | 45,000 | 7,315 | 16 | % | |||||||||||
| Net increase (decrease) in cash | (5,447 | ) | 906 | (6,353 | ) | (701 | %) | |||||||||
We have yet to generate any revenues from our business operation and our ability to generate adequate amounts of cash to meet our needs is entirely dependent on the issuance of shares or loans, which have been our principal sources of working capital so far. For the foreseeable future, we will have to continue to rely on those sources for funding. We have no assurance that we can successfully engage in any further private sales of our securities or that we can obtain any additional loans.
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not required.
| ITEM 4. | CONTROLS AND PROCEDURES. |
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective, due to the size and nature of the existing business operation. Given the size of our current operation and existing personnel, the opportunity to implement disclosure control procedures is limited.
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| ITEM 4. | CONTROLS AND PROCEDURES. (continued) |
Until the organization can increase sufficiently in size to warrant an increase in personnel required to effectively execute and monitor formal disclosure control procedures, those formal procedures will not be implemented. Given the current size of the organization, there are not significant levels of supervision, review, independent directors or a formal audit committee.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS. |
We are not a party to any pending legal proceeding which management believes is likely to result in a material liability and no such action has been threatened against us, or, to the best of our knowledge, is contemplated.
| ITEM 1A. | RISK FACTORS |
Not required
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
Other than as previously disclosed in Current Reports on Form 8-K, we had no unregistered sales of securities during the six months ended June 30, 2022.
Other than as disclosed above and in previous reports filed with the SEC, we have not issued any equity securities that were not registered under the Securities Act within the past three years.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
Not applicable.
| ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
| ITEM 5. | OTHER INFORMATION. |
None.
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| ITEM 6. | EXHIBITS. |
The following documents are included herein:
| Exhibit No. | Document Description |
| 31.1 | Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive and Chief Financial Officer. |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 15th day of August 2022.
| LODE-STAR MINING INC. | |||
| BY | “Mark Walmesley” | ||
| Mark Walmesley | |||
| President,
Principal Executive Officer, and Principal Accounting Officer |
|||
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Signature | Title | Date | |
| /s/ Mark Walmesley | Director, President, Chief Executive Officer | August 15, 2022 | |
| Mark Walmesley | |||
| /s/ Samuel Sternheim | Director, Chief Financial Officer, Corporate Secretary, Treasurer | August 15, 2022 | |
| Samuel Sternheim |
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EXHIBIT INDEX
| Exhibit No. | Document Description |
| 31.1 | Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive and Chief Financial Officer. |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
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