UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2020
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 333-197692
| STAR ALLIANCE INTERNATIONAL CORP. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 37-1757067 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5763 Corsa Avenue Suite 218
Westlake Village, CA 91362
(Address of principal executive offices)
310-571-0020
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common | STAL | OTC MARKETS-PINK |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes x No ¨
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 x
Indicate by check mark whether the registrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨ No x
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”, “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 | x |
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ¨ No x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
APPLICABLE ONLY TO CORPORATE ISSUERS:
The market value of the Company as of June 30, 2020 was $107,313,334.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 117,299,584 shares of $0.001 par value common stock outstanding as of March 15, 2021.
STAR ALLIANCE INTERNATIONAL CORP.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended June 30, 2020
| i |
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.
On May 17, 2018, Mr. Carey appointed Alexei Tchernov as CEO and Director, Franz Allmayer as Vice President and Director, John C. Baird as CFO and Director and Themis Glatman as Secretary and Director.
On May 22, 2019, the Board discussed the positions of the Directors and Officers. Mr. Tchernov resigned his position as CEO and Themis Glatman resigned as Company Secretary. The new appointments were made as follows:
| Richard Carey | CEO and Joint Chairman, Board member |
| John Baird | CFO and Joint Chairman, Board Member |
| James Baughman | President Operations |
| Alexei Tchernov | Executive Vice President Finance, Board Member |
| Franz Allmayer | Vice President Finance, Board Member |
| Themis Glatman | Treasurer, Board Member |
| Anthony Anish | Company Secretary, Board Member |
In August 14, 2018, the Company entered into an Exclusive Option Agreement (the “Agreement”) with Starving Lion, Inc. (“Lion”). Under the Agreement, the Company has been granted the exclusive option, for a period of six (6) months, to acquire the assets from Starving Lion, Inc. specified under the June 4, 2018 Letter of Intent. The assets pertain mainly to two mines located in Guatemala; one is a magnesium mine in El Progresso, and the other is a gold mine in Livingston.
The required purchase price for the Starving Lion, Inc. assets will be $1,000,000 cash, together with the issuance to Lion of new common and/or preferred stock to represent fifty-eight percent (58%) of the Company’s issued and outstanding common stock on a fully-diluted, post-closing basis. The Company decided not to proceed with this potential acquisition at this time.
On October 25, 2018, Star entered into a Letter of Intent (the “LOI”) with Troy Mining Corporation, a Nevada corporation (“Troy”) and its two majority shareholders and on March 25, 2019 and on August 5th this LOI was extended. Troy is the owner of 78 gold mining claims consisting of approximately 4800 acres, located east/southeast of El Portal, California, in Mariposa County. Troy also owns a production processing mill together with related equipment and buildings. On August 13th, 2019, the Company closed the transaction making the first payment on the acquisition of all the assets of Troy Mining Corporation.
The Company’s business focus will be the pursuit of mining and mining technology businesses. The Company acquired the assets of Troy Mining Corporation, its first mining assets, on August 13, 2019.
On June 12, 2019, the Board approved the issuance of 48 million shares of common stock to Richard Carey, reducing his loan by $48,000.
| 2 |
Employees
Management of the Company expect to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating business opportunities. The need for employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities.
Smaller Reporting Company Status
We qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings, some of which are similar to those of an emerging growth company, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
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 1B Unresolved Staff Comments
Not applicable
We currently do not own or rent any property.
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this year-end report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
Item 4. Mine Safety Disclosures
Not applicable.
| 3 |
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
There is a limited public market for our common shares. Our common shares are quoted on the OTC Bulletin Board at this time. Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’ s operations or business prospects. We cannot assure you that there will be a market in the future for our common stock.
OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
As of June 30, 2019, no shares of our common stock had been traded but as of June 30, 2020 the shares are now traded.
Number of Holders
As of June 30, 2020, the 107,313,334 issued and outstanding shares of common stock were held by a total of 61 shareholders of record.
Dividends
No cash dividends have been paid on our shares of common stock during the fiscal years ended June 30, 2020 and 2019. We have not paid any cash dividends since our inception and do not foresee declaring any cash dividends on our common stock in the foreseeable future.
Recent Sales of Unregistered Securities
During the year ended June 30, 2020, the Company sold 6,053,331 shares of common stock for total cash proceeds of $188,845. As of June 30, 2020, the shares have not yet been issued by the transfer agent and therefore have been credited to common stock to be issued.
Purchase of our Equity Securities by Officers and Directors
None.
Other Stockholder Matters
None.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.
| 4 |
Our cash balance was $20,058 as of June 30, 2020. We believe our cash balance is not sufficient to fund our limited levels of operations for any period of time. We have been utilizing funds borrowed from our Chairman. The Chairman has no commitment, arrangement or legal obligation to advance or loan funds to the company. The borrowing is non-interest-bearing, unsecured, and due on demand.
Our independent registered public accountants have issued a going concern opinion. This means that 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 bills. The accompanying financial statements have been prepared assuming that the Company continues 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 financial statements, the Company has accumulated deficit of $ 2,669,774 and negative working capital of $178,985 as of June 30, 2020, and net loss of $1,894,320 and no cash flows in operating activities for the year ended June 30, 2020. Due to these conditions, it raises substantial doubt about its ability to continue as a going concern.
We are an “emerging growth company” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to: not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Results of Operations for the years ended June 30, 2020 and 2019
Operating expenses
General and administrative expenses were $75,110 for the year ended June 30, 2020, compared to $27,617 for the year ended June 30, 2019, an increase of $47,493. The increase is due to an increase in filing fees and consulting expenses.
Professional fees were $144,980 for the year ended June 30, 2020, compared to $63,534 for the year ended June 30, 2019, an increase of $81,446. Professional fees consist mainly of legal, accounting and audit expense. The increase is due to an increase in legal and audit fees.
Other income (expense)
For the year ended June 30, 2020, we had interest expense of $4,590 and a loss on conversion of debt of $6,000, compared to interest expense of $2,732 for the year ended June 30, 2019. In addition, there was a loss on conversion of accrued salaries of $148,000 for the year ended June 30, 2020 and $448,000 for the year ended June 30, 2019. Interest expense has increased as a result of the two notes payable that were added to the Company’s liabilities.
Net Loss
Net loss for the year ended June 30, 2020 was $1,894,320 compared to $141,882 for the year ended June 30, 2019.
Plan of Operations
We expect that working capital requirements will continue to be funded through borrowing from related parties. Subsequent to the year end the Company acquired the mining claims and equipment assets of Troy Mining Corporation. We continue to search for other new business opportunities in the mining arena.
| 5 |
Off Balance Sheet Arrangements
We have no 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.
Material Commitments
As of the date of this Annual Report, we do not have any material commitments.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment during the next twelve months.
Liquidity and Capital Resources
The accompanying 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 financial statements, the Company has an accumulated deficit of $2,669,774 and negative working capital of $178,985 as of June 30, 2020. For the year ended June 30, 2020 the Company had a net loss of $1,894,320 with $135,591 of cash used 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 $135,591 for the year ended June 30, 2020 as compared to the net cash used in operating activities of $44,910 for the year ended June 30, 2019. The increase in net cash used in operating activities from 2019 to 2020 is because expenses increases during the year ended June 30, 2020.
Net cash provided by financing activities was $155,178 and $45,081 for the years ended June 30, 2020 and 2019, respectively.
Over the next twelve months, we expect our principle source of liquidity may be dependent on borrowings from related parties.
Going Concern Consideration
Our auditors have issued a “going concern” opinion, meaning that there is substantial doubt if we can continue as an on-going business for the next twelve months unless we obtain additional capital. The Company’s cash position may not be sufficient to support its daily operations.
Limited operating history and need for additional capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are in start-up stage operations and have not generated any significant revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to smaller reporting companies.
| 6 |
Item 8. Financial Statements and Supplementary Data
| 7 |
 |
AJ Robbins CPA, LLC Certified Public Accountants
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Star Alliance International Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Star Alliance International Corp (the Company) as of June 30, 2020 and 2019 and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the years then ended and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 3 to the financial statements, the Company has an accumulated deficit of $2,669,774 and negative working capital of $178,985 as of June 30, 2020. For the year ended June 30, 2020 the Company had a net loss of $1,894,320. These factors create an uncertainty as to the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Emphasis of Matters-Significant Related Party Transactions
The Company has had significant transactions and relationships with related parties, including the Company’s Co-Chairman, which are described in the financial statements. Transactions involving related parties cannot be presumed to be carried out on an arm's length basis, as the requisite conditions of competitive, free market dealings may not exist.
/s/AJ Robbins CPA LLC
We have served as the Company’s auditor since 2019.
Denver, Colorado
March 17, 2021
aj@ajrobbins.com
400 South Colorado Blvd, Suite 870, Denver, Colorado 80246
(B)303-537-5898 (M)720-339-5566 (F)303-586-6261
| F-1 |
STAR ALLIANCE INTERNATIONAL CORP.
| June 30, | ||||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 20,058 | $ | 471 | ||||
| Total current assets | 20,058 | 471 | ||||||
| Property and equipment | 450,000 | – | ||||||
| Mining claims | 57,532 | – | ||||||
| Total other assets | 507,532 | – | ||||||
| Total Assets | 527,590 | 471 | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 40,630 | $ | 32,692 | ||||
| Accrued expenses | 8,658 | 2,863 | ||||||
| Accrued compensation | 144,360 | – | ||||||
| Notes payable | 435,700 | 20,000 | ||||||
| Note payable – former related party | 32,000 | 32,000 | ||||||
| Related party advance | 2,576 | 3,980 | ||||||
| Due to former related party | 42,651 | 42,651 | ||||||
| Total current liabilities | 706,575 | 134,186 | ||||||
| Total liabilities | 706,575 | 134,186 | ||||||
| COMMITMENTS AND CONTINGENCIES (see footnotes) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, $0.001 par value, 25,000,000 authorized, and $1,883,000 Series B issued and outstanding | – | – | ||||||
| Series B preferred stock, $0.001 par value, 1,900,000 authorized, 1,833,000 and 0, issued and outstanding, respectively | 1,883 | – | ||||||
| Common stock, $0.001 par value, 175,000,000 shares authorized, 107,313,334 and 83,450,000 shares issued and outstanding as of June 30, 2020 and 2019, respectively | 107,314 | 83,450 | ||||||
| Additional paid-in capital | 2,382,859 | 551,289 | ||||||
| Common stock to be issued | 8,633 | 7,000 | ||||||
| Stock subscription receivable | (9,900 | ) | – | |||||
| Accumulated deficit | (2,669,774 | ) | (775,454 | ) | ||||
| Total stockholders’ deficit | (178,985 | ) | (133,715 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 527,590 | $ | 471 | ||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
STAR ALLIANCE INTERNATIONAL CORP.
| For the Years Ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| Operating expenses: | ||||||||
| General and administrative | $ | 75,110 | $ | 27,617 | ||||
| Professional fees | 144,980 | 63,534 | ||||||
| Consulting | 903,540 | – | ||||||
| Director compensation | 474,100 | – | ||||||
| Officer compensation | 168,000 | – | ||||||
| Total operating expenses | 1,765,730 | 91,151 | ||||||
| Loss from operations | (1,765,730 | ) | (91,151 | ) | ||||
| Other expense | ||||||||
| Interest expense | (4,590 | ) | (2,731 | ) | ||||
| Loss on conversion of accrued salary | (124,000 | ) | (48,000 | ) | ||||
| Total other expense | (128,590 | ) | (50,731 | ) | ||||
| Loss before provision for income taxes | (1,894,320 | ) | (141,882 | ) | ||||
| Provision for income taxes | – | – | ||||||
| Net loss | $ | (1,894,320 | ) | $ | (141,882 | ) | ||
| Net loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.00 | ) | ||
| Weighted average common shares outstanding – basic and diluted | 95,935,432 | 37,817,123 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
STAR ALLIANCE INTERNATIONAL CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
| Preferred Stock | Common Stock | Additional Paid-in | Common Stock To Be | Stock Subscription | Accumulated | ||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Issued | Receivable | Deficit | Total | |||||||||||||||||||
| Balance, June 30, 2018 | – | $ | – | 35,450,000 | $ | 35,450 | $ | 503,289 | $ | – | $ | – | $ | (633,572 | ) | $ | (94,833 | ) | |||||||||
| Common stock issued to convert related party advances | – | – | 48,000,000 | 48,000 | 48,000 | – | – | – | 96,000 | ||||||||||||||||||
| Common stock sold | – | – | – | – | – | 7,000 | – | 7,000 | |||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (141,882 | ) | (141,882 | ) | ||||||||||||||||
| Balance, June 30, 2019 | – | – | 83,450,000 | 83,450 | 551,289 | 7,000 | – | (775,454 | ) | (133,715 | ) | ||||||||||||||||
| Preferred stock issued for acquisition | 1,833,000 | 1,883 | – | – | 5,649 | – | – | – | 7,532 | ||||||||||||||||||
| Stock issued for services | – | – | 4,560,000 | 4,560 | 489,280 | – | – | 493,840 | |||||||||||||||||||
| Stock issued for services – related party | – | – | 9,500,000 | 9,500 | 922,500 | – | – | – | 932,000 | ||||||||||||||||||
| Stock issued for debt | – | – | 2,750,000 | 2,750 | 58,296 | – | – | – | 61,046 | ||||||||||||||||||
| Stock issued for accrued salary | – | – | 1,000,000 | 1,000 | 167,000 | – | – | – | 168,000 | ||||||||||||||||||
| Stock sold for cash | – | – | 6,053,331 | 6,054 | 188,845 | 1,633 | (9,900 | ) | – | 186,632 | |||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (1,894,320 | ) | (1,894,320 | ) | ||||||||||||||||
| Balance, June 30, 2020 | 1,833,000 | $ | 1,883 | 107,313,331 | $ | 107,314 | $ | 2,382,859 | $ | 8,633 | $ | (9,900 | ) | $ | (2,669,774 | ) | $ | (178,985 | ) | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
STAR ALLIANCE INTERNATIONAL CORP.
| For the Years Ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (1,894,320 | ) | $ | (141,882 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Common stock issued for services | 493,840 | – | ||||||
| Common stock issued for services – related party | 932,000 | – | ||||||
| Loss on conversion of debt | 6,000 | – | ||||||
| Loss on conversion of related party advance | – | 48,000 | ||||||
| Loss on conversion of accrued salary | 118,000 | – | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts payable | 7,938 | 43,192 | ||||||
| Accrued expenses | 6,591 | 5,781 | ||||||
| Accrued compensation | 194,360 | – | ||||||
| Net cash used in operating activities | (135,591 | ) | (44,909 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds of borrowings from a related party | 38,700 | 72,085 | ||||||
| Repayment to related party | (39,854 | ) | (34,005 | ) | ||||
| Proceeds from the sale of common stock | 186,632 | 7,000 | ||||||
| Proceeds from notes payable | 89,400 | – | ||||||
| Payment on notes payable | (119,700 | ) | – | |||||
| Net cash provided by financing activities | 155,178 | 45,080 | ||||||
| Net increase in cash | 19,587 | 171 | ||||||
| Cash at the beginning of year | 471 | 300 | ||||||
| Cash at the end of year | $ | 20,058 | $ | 471 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | – | $ | – | ||||
| Income taxes paid | $ | – | $ | – | ||||
| NON-CASH TRANSACTIONS: | ||||||||
| Related party advance converted to common shares | $ | – | $ | 48,000 | ||||
| Operating expenses paid directly by a related party | $ | – | $ | 13,600 | ||||
| Note issued to settle unpaid legal fees | $ | – | $ | 20,000 | ||||
| Conversion of debt | $ | 104,250 | $ | – | ||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
Star Alliance International Corp.
June 30, 2020
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 financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”).
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.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the years ended June 30, 2020 or 2019.
Long Lived Assets
Property consists of mining equipment not yet used. Our company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, we record an impairment charge. Our company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
Stock-based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company accounts for stock-based compensation in accordance with the provision of ASC 505-50, Equity Based Payments to Non-Employees, which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest.
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 (3) 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 (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| F-6 |
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The Company’s financial instruments are consisted principally of accrued expenses and short term debt. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature.
Net income (loss) per common share
Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants. The diluted loss per share is the same as the basic loss per share for the years ended July 31, 2020 and 2019, as the inclusion of any potential shares would have had an antidilutive effect due to our loss from operations.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). Under Topic 326, an entity is required to estimate CECL on available-for-sale (AFS) debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”. Topic 326 also requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL. The credit-related losses are required to be recognized through earnings and non-credit related losses are reported in other comprehensive income. In April 2019, the FASB further clarified the scope of Topic 326 and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. The new guidance will require modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. The amendments in this Update for the Company are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted in any interim period after the issuance of this of this Update. The Company is evaluating the impact of the adoption of the new standard on its financial statement and disclosures.
In August 2018, the FASB issued ASU 2018-13 to improve the effectiveness of disclosures about fair value measurements required under ASC 820. The ASU modifies the disclosure objective paragraphs of ASC 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote the appropriate exercise of discretion by entities. The disclosure objective added in ASC 820-10-50-1C states: The objective of the disclosure requirements in this Subtopic is to provide users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements: a) the valuation techniques and inputs that a reporting entity uses to arrive at its measures of fair value, including judgments and assumptions that the entity makes, b) the uncertainty in the fair value measurements as of the reporting date, and c) how changes in fair value measurements affect an entity’s performance and cash flows. The new ASU is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted.
The Company has implemented all new accounting pronouncements that are in effect. These 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.
| F-7 |
NOTE 3 – GOING CONCERN
The accompanying 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 financial statements, the Company has an accumulated deficit of $2,669,774 and negative working capital of $178,985 as of June 30, 2020. For the year ended June 30, 2020 the Company had a net loss of $1,894,320 (includes $1,425,840 of non-cash stock compensation expense and a $118,000 loss on conversion of accrued salary), with $135,591 of cash used 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.
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate.
NOTE 4 – ACQUISITION
On August 13, 2019, The Company closed an Asset Purchase Agreement (the “APA”) with Troy Mining Corporation (“Troy”). Under the APA, the company acquired 78 gold mining claims consisting of approximately 4,800 acres, located east/southeast of El Portal, California, in Mariposa County, together with all of Troy’s rights to related equipment and buildings currently located on the mining claims. In exchange for the mining claims and related assets, the company agreed to issue 1,833,000 shares of a new class of preferred stock designated Series B Preferred Stock; and agreed to make total cash payments in the amount of $500,000 under a Promissory Note (the “Purchase Note”).
Under the Purchase Note, we paid $50,000 at the time of the closing, and are required to pay an additional $50,000 within sixty days of the closing, and $25,000 every other month thereafter, with the entire remaining amount due no later than March 31, 2020. In the event of default under the Purchase Note, all assets acquired under the APA will be forfeited back to Troy. We are current on all the terms of the agreement.
On October 9, 2019, a contract extension was agreed between Star Alliance International Corp. and Troy Mining Corporation. The agreement gives the Company 150 days to file an S-1 registration statement and obtain approval for the shares that are to be issued to the Troy shareholders to become free trading. The S1 registration was filed on August 14, 2020.
As of June 30, 2020, the Company has paid $115,000 on the note. The balance as of June 30, 2020, is $385,000.
NOTE 5 – RELATED PARTY TRANSACTIONS
In June 2018, Richard Carey, the Company’s Chairman, advanced the Company $300 to open a bank account. During the year ended June 30, 2019, Mr. Carey advanced the Company an additional $72,085, of which $34,005 was repaid. On June 12, 2019, Mr. Carey converted $48,000 of the amount due to him into 48,000,000 shares of common stock. The stock was fair valued at $0.002 per share by an independent valuation firm resulting in a loss on conversion of $48,000.
As of June 30, 2020, and June 30, 2019, the balance due to Mr. Carey is $0 and $3,980, respectively. The advances are unsecured, non-interest bearing and due on demand.
| F-8 |
As of June 30, 2020, the Company owes Anthony Anish, a board member, $1,976 for expense reimbursement.
On August 1, 2019, employment agreements for Richard Carey, John Baird and Anthony Anish were signed providing for annual salaries of $120,000 per annum for Richard Carey and $60,000 for John Baird and Anthony Anish. As of June 30, 2020, the Company has accrued compensation due to Mr. Carey of $46,360, Mr. Baird of $55,000 and Mr. Anish of $43,000.
Mr. Carey is using his personal office space at no cost to the Company.
During the year ended June 30, 2020, the Company granted 4,000,000 shares of common stock to an officer and two directors for services rendered. The shares were valued at $0.002 per share for total non-cash expense of $8,000.
During the year ended June 30, 2020, the Company granted 2,500,000 shares of common stock to directors for services rendered. The shares were valued at $0.168 per share for total non-cash expense of $420,000.
During the year ended June 30, 2020, the CEO converted $50,000 of accrued compensation into 1,000,000 shares of common stock. The shares were valued at $0.168. The Company recognized a $118,000 loss on the conversion.
During the year ended June 30, 2020, the Company granted 2,000,000 shares of common stock to the brother of the CEO for services rendered. The shares were valued at $0.168 per share for total non-cash expense of $336,000.
During the year ended June 30, 2020, the Company granted 1,000,000 shares of common stock to the brother of the former CFO for services rendered. The shares were valued at $0.168 per share for total non-cash expense of $168,000.
NOTE 6 – NOTE PAYABLE
As of June 30, 2020 and 2019, 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 June 30, 2020 and 2019, there is $3,336 and $1,732, respectively, of accrued interest due on the note. The note is past due and in default.
On October 15, 2018, the Company executed a promissory note for $20,000, for amounts previously accrued and payable to the Company’s former attorney. The note bears interest at 8% and is due on October 15, 2019. As of and June 30, 2020 and 2019, there is $15,300 and $2,570 and $20,000 and $1,131, respectively, of principal and accrued interest due on the note.
On June 11, 2019, the company executed a promissory note with Troy for $500,000 (Note 4). The Company paid the initial $50,000 due on the note on August 13, 2019 and $35,000 as of December 31, 2019. As of June 30, 2020 there is $385,000 due on this note.
In order to pay the initial $50,000 required under the APA and the Purchase Note, the Company obtained funding under a Convertible Promissory Note in the amount of $50,000 issued to a private investor. The Convertible Promissory Note accrues interest at an annual rate of 10% and is due and payable in full in 60 days. On October 7, 2019, a new $250,000 Convertible Promissory Note with initial funding of $50,000 was issued to the same investor. The Convertible Promissory Note accrues interest at an annual rate of 10% and is due and payable in full in 60 days. The Convertible Promissory Note is convertible to shares of our common stock at a price of $0.05 per share. The investor has converted the $50,000 and $50,000 from Q1 into 2,260,000 shares of common stock.
| F-9 |
During the year ended June 30, 2020, the Company received a total of $79,000 in other loans from two individuals. These loans accrue interest at 10% and are due on demand. On February 28, 2020, one of the individuals converted $35,000 and $796 of principal and interest, respectively, into 2,000,000 shares of common stock. On June 29, 2020, the individuals converted $19,000 of principal into 500,000 shares of common stock. The company recognized a $6,000 loss on the conversion. Accrued interest on the remaining $25,000 as of June 30, 2020 is $1,150.
NOTE 7 – PREFERRED STOCK
Of the 25,000,000 shares of the Company's authorized Preferred Stock, $0.001 par value per share, 1,900,000 are designated as Series B Preferred Stock. Only one person or entity, is entitled to be designated as the owner of all of the Series B Preferred Stock (the “Holder”), in whose name the initial certificates representing the Series B Preferred Stock shall be issued. Any transfer of the Series B Preferred Stock to a different Holder must be approved in advance by the Corporation; provided, however, the Holder shall have the right to transfer the Series B Preferred Stock, or any portion thereof, to any affiliate of Holder or nominee of Holder, without the approval of the Corporation. Each share of Preferred Stock shall have 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 1,833,000 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.
NOTE 8 – COMMON STOCK
During the year ended June 30, 2020, the Company granted 1,640,000 shares of common stock for services. The shares were valued at $0.002 per share for total non-cash expense of $3,280.
During the year ended June 30, 2020, the Company granted 2,960,000 shares of common stock for services. The shares were valued at $0.168 per share for total non-cash expense of $490,560.
During the year ended June 30, 2020, the Company sold 6,053,331 shares of common stock for total cash proceeds of $186,632. In addition, the Company issued 1,000,000 shares of common stock that had been purchased in the prior period. Refer to Note 6 for additional shares issued under a convertible promissory note.
During the year ended June 30, 2020, the Company issued 2,750,000 shares of common stock in conversion of a $35,250 and $769 of principal and interest, respectively.
Refer to Note 5 for stock issuances to related parties.
NOTE 9 – INCOME TAX
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used due to the new tax law recently enacted.
| F-10 |
Net deferred tax assets consist of the following components as of June 30:
| 2020 | 2019 | |||||||
| Deferred Tax Assets: | ||||||||
| NOL Carryover | $ | 560,650 | $ | 152,765 | ||||
| Less valuation allowance | (560,650 | ) | (152,765 | ) | ||||
| Net deferred tax assets | $ | – | $ | – | ||||
At June 30, 2020, the Company had net operating loss carry forwards of approximately $560,650 that may be offset against future taxable income. No tax benefit has been reported in the June 30, 2020 or 2019 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2020, the Company had no accrued interest or penalties related to uncertain tax positions.
With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2014.
NOTE 10 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were available to be issued and has determined that the following material events have occurred.
1. On August 12, 2020, John Baird resigned his positions as Chief Financial Officer, Joint Chairman and a Director of the Company.
2. On August 14, 2020, the Company filed an S1 Registration Statement. The Securities and Exchange Commission issued their first set of comments which the Company plans to respond to shortly.
3. On October 14, 2020, Mr. Fernando Godina was appointed Executive Vice President of Operations and a Director of the Company.
4. On February 16, 2021 a contract extension for ninety (90) days was signed between Troy Mining Corporation and Star Alliance International Corporation. A payment of $40,000 was made by Star Alliance that reduces the final amount due to Troy Mining Corporation.
| F-11 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of June 30, 2020, the end of the year covered by this report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.
Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be 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. Because of 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. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls 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.
With respect to the fiscal year ending June 30, 2020, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based upon our evaluation regarding the fiscal year ending June 30, 2019, our management, including our principal executive officer and principal financial officer, has concluded that our disclosure controls and procedures were ineffective.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2019. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on that evaluation, our management concluded that our internal controls over financial reporting were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We note the following deficiencies that management believes to be material weaknesses:
| · | The Company’s lack of segregation of duties. | |
| · | Lack of an audit committee and independent directors | |
| · | Management has not established appropriate and rigorous procedures for evaluating internal controls over financial reporting. Due to limited resources and lack of segregation of duties, documentation of the limited control structure has not been accomplished. | |
| · | We employ policies and procedures for reconciliation of the financial statements and note disclosures, however, these processes are not appropriately documented. | |
| · | Management has not established methodical and consistent data back-up procedures to ensure loss of data will not occur. |
| 8 |
The Company is evaluating the necessity of implementing an independent board of directors to rectify these weaknesses.
A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B. Other Information
We have no other information to disclose that was required to be disclosed in a report on Form 8-K during the fourth quarter of fiscal year ended June 30, 2020 that was not reported.
| 9 |
Item 10. Directors, Executive Officers and Corporate Governance
| Name | Age | Position | ||
| Richard Carey | 82 | Chief Executive Officer, Co Chairman of the Board | ||
| Anthony L. Anish | 72 | Company Secretary, Director | ||
| Alexei Tchernov | 58 | Executive Vice-President Finance, Director | ||
| James Baughman | 64 | President Operations | ||
| Franz Allmayer | 32 | Vice President Finance, Director | ||
| Themis Glatman | 62 | Treasurer, Director |
Biographical Information and Background of officer and director
Richard Carey – Chief Executive Officer and Co- Chairman, appointed May 22, 2019
Richard Carey is our President. Mr. Carey began his career in 1958 when he received congressional appointment to the US Naval Academy as the son of Congressional Medal of Honor recipient Charles Francis Carey Jr. Upon honorable discharge from the US Navy in 1964, Mr. Carey began a career in finance as a NYLIC underwriter for New York Life. From 1967 to 1973, Mr. Carey worked as a stockbroker and principal of a brokerage firm. In 1973 he began structuring oil and gas limited partnerships for developmental drilling programs. These programs included hundreds of successful oil and gas wells, and a lucrative Geo-Thermal project in Colorado as a general partner with AMEX (an American Stock Exchange listed company).
In the subsequent 40 years, Mr. Carey has founded and co-founded multiple companies in a wide range of industries including diamond and gold mining operations, oil and gas exploration, energy resellers, entertainment, specialty finance and tax offset programs. With his broad experience and an extensive personal and business network, Mr. Carey’s financial acumen has added significant value to every project in which he has participated. With his unique understanding of the diversity of business structures and an ongoing commitment to innovate and adapt to new practices, he continues to build upon the depth of knowledge and success gained throughout his career.
Anthony L. Anish Corporate Secretary, appointed May 22, 2019
Mr. Anish, as Corporate Secretary, is responsible for board minutes and implementing board decisions, advising directors, handling share issuances and transactions, legal requirements, auditors, lawyers, tax advisers, bankers and shareholders on governance issues, and ensuring compliance of relevant laws and regulatory matters. Mr. Anish serves as a principal officer of M Line Holdings, Inc. and Square Chain Corporation where he is responsible for meeting all the SEC requirements. Previously, he successfully founded and expanded the London-based Anish and Co., chartered accountants, Mr. Anish sold his interest to two junior partners to join as CFO his accounting client, Performance Tire, Ltd. A year later he joined Performance Tire, Inc. where he led an expansion into the U.S. that took sales from $2MM to $28MM in 2 years. He later purchased the company's 9 retail stores, which he later sold to return to his accounting and finance background. Mr. Anish provided business finance for companies through equipment leasing and asset-based lending from its Orange County office. Prior to joining M-Line he consulted on a number of reverse mergers, provided business finance to private and public companies, and assisted taking a private company public through the full registration process. Mr. Anish received his Chartered Accounting degree after articling with Percy Phillips and Co., a London based Chartered Accounting firm.
Alexei Tchernov – Executive Vice-President Finance, appointed May 22, 2019
Alexei Tchernov is our Chief Executive Officer, and in this capacity acts as a direct liaison between management and the Board. He is responsible for creating, planning, implementing and integrating the strategic direction of the Company and as such responsible for the company operations, marketing, strategy, financing, and creation of company culture. Mr. Tchernov has twenty-five years of financial, investment, and significant polymetallic development project experience domestically and internationally. Mr. Tchernov spent fourteen years with the IFC Metropol group of companies as Acting Head of Corporate Finance and Head of Investment Projects. Previously he served as Financial Director of Neptune Pacific. He began his career as an associate with The Boston Consulting Group and later as a financial analyst with the United Financial Group division of Deutsche Bank. Mr. Tchernov received his Ph.D. in computational mathematics and cybernetics, his M.S. in applied mathematics, his Law Degree from Moscow State University, and his MBA from Southern Methodist University in Dallas TX.
| 10 |
Franz Allmayer - Vice President Finance, appointed May 22, 2019
Franz Allmayer as Vice President Mergers & Acquisitions is responsible for sourcing and evaluating investment opportunities including joint ventures and negotiating and closing investments. Mr. Allmayer has held positions with companies such as SIMGO Mobile since September 2015 as their Business Developer and Global Advisor, the Clinton Health Initiative from November 2014 to September 2015 as a consultant, LMM General trading from October 2015 to October 2016 as a Strategic Research & Development Innovation Scout and Vamed Engineering GmbH & CO KG from April 2012 to September 2014 as a Project Engineer. Mr. Allmayer graduated in September 2014 from the London School of Economics and Political Science with a Master of Science degree in Health Policy, Planning and Financing with merit. In addition, he has a Bachelor of Science degree in Biomedical Engineering with distinction from the University of Applied Sciences Techniku, Vienna.
Themis Glatman - Treasurer, appointed May 22, 2019
Mrs. Glatman was born in Brazil where she achieved an athletic scholarship that allowed her to come to the United States where she attended Brigham Young University in Utah, studying Chemical Engineering for three years. She is fluent in English, Spanish, Portuguese with some French and Italian. Having moved to Los Angeles in 1981 she pursued a seventeen-year career in construction including commercial, residential, multi-family as well as smaller remodeling projects. Remodeling included acquisitions of homes for her own remodeling projects. She is well versed in reading blueprints and understands architectural and engineering requirements of projects from excavation, grading to paving and concrete work through final finishes.
James Baughman, Vice President Operations, appointed May 22, 2019
James Baughman, an economic geologist and mining executive, is our President and responsible for assisting the CEO in creating, planning, implementing and integrating the strategic direction of the Company and as such shares with the CEO responsibilities for the company operations, marketing, strategy, financing, and creation of company culture. Mr. Baughman has over thirty years of progressive experience in advancing gold, silver, and base metal projects from grassroots to advance stage projects. He has held senior positions (i.e., Chief Geologist, Chairman, President, Acting CFO, Chief Operating Officer) in both private and publicly traded mining and mineral exploration companies during his 30-year industry career. Mr. Baughman was on the successful Greens Creek discovery team and has lead exploration and development projects throughout the Western Hemisphere. Mr. Baughman was CEO of High Plains Uranium that was sold for US $55 Million in 2006. Mr. Baughman is a registered member of the Society of Mining, Metallurgy, Exploration and a member of the Society of Economic Geologists. Mr. Baughman received a Bachelor of Science degree in Geology in 1983 from the University of Wyoming and is a registered professional geologist (P. Geo) in the State of Wyoming. Mr. Baughman is a Registered Member of the Society of Mining, Metallurgy, and Exploration (SME) and a Qualified Person (QP) on the Toronto Stock Exchange (TSX) and Australian Stock Exchange (ASX).
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Family Relationships
There are no family relationships between or among the directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.
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Involvement in Certain Legal Proceedings
No executive officer or director has been involved in the last ten years in any of the following:
| · | Any bankruptcy petition filed by or against any business or property of such person, or of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| · | Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| · | Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; |
| · | Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| · | Being the subject of or a party to any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation, or any law or regulation respecting financial institutions or insurance companies, including but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail, fraud, wire fraud or fraud in connection with any business entity; or |
| · | Being the subject of or a party to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act, any registered entity (as defined in Section 1(a) (29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Board Committees and Audit Committee Financial Expert
We do not currently have a standing audit, nominating or compensation committee of the Board of Directors, or any committee performing similar functions. Our Board of Directors performs the functions of audit, nominating and compensation committees. As of the date of this annual report, no member of our Board of Directors qualifies as an “audit committee financial expert” as defined in Item 407(d) (5) of Regulation S-K promulgated under the Securities Act.
Director Nominations
As of June 30, 2020, we did not affect any material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors. We have not established formal procedures by which security holders may recommend nominees to the Company’s Board of Directors.
Code of Ethics
We have adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics may be obtained free of charge by contacting us at the address or telephone number listed on the cover page hereof.
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Item 11. Executive Compensation
| Name and Principal Position | Year | Salary (US$) | Bonus (US$) | Stock Awards (US$) | Option Awards (US$) | Non-Equity Incentive Plan Compensation (US$) | Nonqualified Deferred Compensation Earnings (US$) | All Other Compensation (US$) | Total (US$) | ||||||||||||||||||
| Richard Carey | 2020 | 46,360 | 0 | 118,000 | 0 | 0 | 0 | 0 | 164,300 | ||||||||||||||||||
| (CEO) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| John Baird | 2020 | 55,000 | 0 | 5000 | 0 | 0 | 0 | 0 | 60,000 | ||||||||||||||||||
| (CFO) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Anthony L. Anish | 2020 | 43,000 | 0 | 254,000 | 0 | 0 | 0 | 0 | 297,000 | ||||||||||||||||||
| (Company Secretary) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Alexei Tchernov | 2020 | 0 | 0 | 1000 | 0 | 0 | 0 | 0 | 1000 | ||||||||||||||||||
| (Executiove VP Finance) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Franz Allmayer | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| (Vice President Finance) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Themis Glatman | 2020 | 0 | 0 | 168,000 | 0 | 0 | 0 | 0 | 168,000 | ||||||||||||||||||
| (Treasurer) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| James Baughman | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| (Vice President Operations) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Grants of Plan-Based Awards Table
None of our named executive officers received any grants of stock, option awards or other plan-based awards during the year ended June 30, 2020 or 2019. The Company has no activity with respect to these awards.
Options Exercised and Stock Vested Table
None of our named executive officers exercised any stock options, and no restricted stock units, if any, held by our named executive officers vested during the year ended June 30, 2020 or 2019. The Company has no activity with respect to these awards.
Outstanding Equity Awards at Fiscal Year-End Table
None of our named executive officers had any outstanding stock or option awards as of June 30, 2020 that would be compensatory to the officer. The Company has not issued any awards to its named executive officers. The Company and its Board of Directors may grant awards as it sees fit to its employees as well as key consultants.
Compensation of Directors
During the fiscal year ended June 30, 2020, we did not provide compensation to any of our directors for serving as our director. We currently have no formal plan for compensating our directors for their services in their capacity, although we may elect to issue stock options to such persons from time to time. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of March 9, 2021, the beneficial ownership of our common stock by each executive officer and director, by each person known by us to beneficially own more than 5% of our common stock and by the executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly, and the percentage shown is based on 117,299,584 shares of common stock issued and outstanding.
| Title of Class | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage | |||||||
| Common Stock | Richard Carey | 62,355,500 | 53.16% | |||||||
| Common Stock | Anthony L. Anish | 2,500,000 | 0.021% | |||||||
| Common Stock | Alexei Tchernov | 500,000 | .004% | |||||||
| Common Stock | Franz Allmayer | 250,000 | .002% | |||||||
| Common Stock | Themis Gladman | 250,000 | .002% | |||||||
| Common Stock | James Baughman | 0 | 0% | |||||||
| Common Stock | Total all executive officers and directors (6 persons) | 65,855,500 | 53.19% | |||||||
Item 13. Certain Relationships and Related Transactions, and Director Independence
As of June 30, 2019, the amount due to a related party was $42,651 as operating expenses of $42,651 were paid by Kok Chee Lee, CEO and Director of the Company during the year ended June 30, 2018, on behalf of the Company. The borrowing is unsecured, non-interest-bearing and due on demand.
On May 14, 2018, pursuant to an agreement by and between Richard Carey, the Company’s new President and Chairman of the Board, and Kido, Mr. Richard Carey acquired 22,000,000 shares of common stock of the Company owned by Kido, representing 62.15% ownership of the Company which constitutes control. Mr. Richard Carey accepted the positions of President and Chairman of the Board on the same day.
In June 2018, Richard Carey, the Company’s Chairman, advanced the Company $300 to open a bank account. During the year ended June 30, 2019, Mr. Carey advanced the Company an additional $72,086, of which $34,005 was repaid. On June 12, 2019, Mr. Carey converted $48,000 of the amount due to him into 48,000,000 shares of common stock. As of June 30, 2019, the balance due to Mr. Carey is $3,980. The advance is unsecured, non-interest bearing and due on demand.
Mr. Carey is using his personal office space at no cost to the Company.
Item 14. Principal Accounting Fees and Services
Audit Fees
During fiscal year ended June 30, 2020, we incurred $37,180 in fees to our principal independent accountants for professional services rendered in connection with the audit of our financial statements and for the reviews of our financial statements. Our previous auditors MaloneBailey charged fees of $9,180 for the period July 1, 2019 through June 30, 2020 which included fees for the review of the financial statements for the year ended June 30, 2018.
Tax Fees
During the years ended June 30, 2020 and 2019, our principal accountant did not render services to us for tax compliance, tax advice or tax planning.
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All Other Fees
During the year ended June 30, 2020 and 2019, there were no fees billed for products and services provided by the principal accountant other than those set forth above.
Currently, we have no independent audit committee. Our full board of directors’ functions as our audit committee and is comprised of one director who is not considered to be “independent” in accordance with the requirements of Rule 10A-3 under the Exchange Act. Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
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Item 15. Exhibits, Financial Statement Schedules
The following exhibits are filed as part of this Annual Report.
| Exhibit | Exhibit Description | |
| 3.1 | Articles of Incorporation (1) | |
| 3.x | Bylaws(1) | |
| 10.1 | Exclusive Option Agreement with Starving Lion, Inc. (2) | |
| 31.1 | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 31.2 | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 32.1 | Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
_____________
(1) Incorporated by reference to Registration Statement on Form S-1 filed July 20, 2014
(2) Incorporated by reference to Current Report on Form 8-K filed August 17, 2018
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Pursuant to the requirements of Section 13 or 15(d) 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.
| Star Alliance International Corp. | ||
| By: | /s/ Richard Carey | |
| Richard Carey | ||
| Chief Executive Officer, Joint Chairman | ||
| Date | March 18, 2021 | |
| By: | /s/ Anthony L. Anish | |
| Anthony L. Anish | ||
| Interim Chief Financial Officer | ||
| Date | March 18, 2021 | |
| By: | /s/ Alexei Tchernov | |
| Alexei Tchernov | ||
| Director | ||
| Date | March 18, 2021 | |
| By: | /s/ Franz Allmayer | |
| Franz Allmayer | ||
| Director | ||
| Date: | March 18, 2021 |
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