NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 1 – NATURE OF BUSINESS
Star Alliance
International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko
Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada, for the purpose of acquiring and developing gold
mining as well as certain other mining properties worldwide and environmentally safe technologies both in mining and other business areas.
NOTE 2 – SIGNIFICANT AND CRITICAL ACCOUNTING
POLICIES AND PRACTICES
Basis of Presentation
The accompanying unaudited interim
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States
of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited
financial statements and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the opinion
of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations
for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative
of operations for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the
audited financial statements for the most recent fiscal year, as reported in the Form 10-K for the fiscal year ended June 30, 2022, have
been omitted.
Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of
the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States
of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of
fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1: |
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| |
|
| Level 2: |
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| |
|
| Level 3: |
Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial
assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity
of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest
rates that are consistent with current market rates.
The following table classifies the Company’s liabilities measured
at fair value on a recurring basis into the fair value hierarchy as of December 31, 2022:
| Schedule Of Fair Value, Liabilities Measured on Recurring Basis |
|
|
|
|
|
|
|
|
|
|
|
|
| At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| Derivative |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,085,990 |
|
| Total |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,085,990 |
|
| At June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
| Derivative |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
689,231 |
|
| Total |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
689,231 |
|
NOTE 3 – GOING CONCERN
The accompanying unaudited financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization
of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying unaudited financial statements,
the Company has an accumulated deficit of $24,617,811 as of December 31, 2022. For the six months ended December 31, 2022, the Company
had a net loss of $9,559,411, which did include $9,177,563 of non-cash expense incurred for the issuance of common stock for services,
loss on conversion of preferred stock and derivatives associated with convertible debt. We used $180,861 of cash in operating activities.
Due to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern.
The Company is attempting
to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its
daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and
in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going
concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise
additional funds. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE
4 – ACQUISITIONS
On December 15, 2021, the Company signed
a definitive agreement to purchase 51% of Compania Minera Metalurgica Centro Americana SA. (“Commsa”) for $1,000,000 in cash
and 5,000,000 in restricted shares of common stock. In addition, the Company has agreed to provide up to $7,500,000 working capital to
expand the mining operations in a gold mining project (Rio Jalan Project) in Olancho state in the highlands of Central Honduras. This
transaction has become effective as of January 1, 2022.
This project, that runs along a 12.5
mile stretch of the Rio Jalan River, is a peaceful agrarian area, with only farmers and ranchers in the nearby five villages.
The environmental licenses have been
obtained and exploration is ongoing. The mines will be producing gold early in 2022 and will be expanded early next year. Local small
mining operations are producing a minimum of 250 to 300 oz of gold per site per month while losing approximately 50% of the recoverable
gold particles. Our expanded operations, using modern equipment and our new Genesis program, should result in up to a 98% rate of recoverable
gold, leading to significantly higher quantities of gold per site.
As an important part of this transaction,
STAR has agreed to continue the distribution of aid to the five local villages with 2% of mining profits per village to be used for expanded
school facilities, a medical center, college scholarships and a community center to be used by adults and kids alike. Additional projects,
beneficial to the community, may be considered in the future.
Gold resources are in excess of 1 million
oz. This estimate came from a limited appraisal of the area in which the mines are located. This acquisition become effective in January,
2022. The Company has issued to date 250,000 shares of Common stock and paid $75,000 towards the purchase price.
On May 9, 2022, a binding letter of
intent was signed for the acquisition of 51% of NSM USA a Wyoming corporation that owns 100% of four lithium mines in West Africa. The
cost of these mines is $2 million, most of which is to be used for the growth of the four mines. These mines that are already producing
small amounts of Lithium will be greatly expanded with the purchase of equipment. This transaction is due to close early 2023 with full
production expected in the second quarter of 2023.
On May 11, 2022, a binding letter of
intent was signed for the acquisition of 51% of NGM USA a Wyoming corporation that owns 100% of three gold mines in West Africa. The cost
of this acquisition is $2 million, most of which will be used for equipment and growth of the mines. This transaction is due to close
early 2023. All exploration work has been completed and production is anticipated to start in the second quarter of 2023.
On May 23, 2022, a binding letter of
intent was signed for the acquisition of 75% of Magma International Inc. (“MII”). This acquisition for stock and cash will
result in MII owning the Intellectual property, Building, equipment and significant inventory as well as the know how to produce Barotex.
Mr. Lilo Benzicron the original inventor of this product will join MII as CEO and will be driving the innovation of new products for
MII.
On December 17, 2022, Star has completed
the purchase of the Barotex™ patent, trade mark, equipment and inventory. The operations will be run through a new subsidiary Magma
International, Inc. Star has an option to purchase the 76,000 square foot building, that is the Barotex manufacturing plant. The patent
is for a fiber known as “Barotex”. Barotex is manufactured from igneous rock, is seven times stronger than steel and stronger
than wood, aluminum, fiber glass, carbon fiber and Kevlar. It weighs 50% less than fiber glass and is impervious to chemicals and seawater
and does not rust. It can be used in multiple industries including building materials replacing steel beams, rebar, metal mesh drywall
and wood joists. It offers more protection on armored vehicles, flak jackets etc. than more traditional materials like steel, Kevlar and
other materials. Our fibers reduce pollution when replacing steel, aluminum, fiberglass, Kevlar and carbon fiber while saving rainforests
when used in place of wood. Our fibers do not burn and will melt (like wax) at temperatures 1200 Fahrenheit and above. It will not burn.
The purchase price for the Patents,
trade mark and know how is $10 million. The purchase was made up of the following:
$100,000 already paid
$50,000 to be paid by January 30, 2023
$4,850,000 to be paid in annual payments.
$500,000 to be paid by June 30, 2023 and $750,000 thereafter due by June 30 in each year ended June 30 with the final payment of $600,000
due by June 30, 2029.
7,500,000 of Series D preferred stock
that converts to four (4) shares of common stock of the Company issued to the Mepe Trust.
250,000 Series D preferred stock that
converts to four (4) shares of common stock of the Company issued to Klara Benzicron
2,500,000 Series D preferred shares
that convert to four ($) shares of common stock issued to Lilo Benzicron.
Twenty five percent (25%) of the issued
share capital of Magma International, Inc.
In addition, Lilo Benzicron will receive
a royalty on sales annually of 2% of gross sales up to $50 million, 1.5% of the next $50 million gross sales and 1% thereafter.
The purchase price for the
equipment and inventory was $1.2
million. The purchase was made up as follows:
$50,000 no later than January 15, 2023.
This amount has not been paid as yet.
$350,000 no later than March 20, 2023
$400,000 due and payable no later than
December 17, 2023.
1,500,000 shares of common stock to
be issued as security for the $350,000 payment. If Star makes the payment timely, these shares will be returned to treasury.
250,000 shares of series D preferred
shares that convert to four (4) shares of common stock.
NOTE 5 – INTANGIBLE ASSETS
Intangible assets, net, consist of the following:
| Schedule of intangible assets | |
| |
| | |
December 31, 2022 | |
| Intellectual Property | |
$ | 15,250,000 | |
Once operations utilizing the intellectual
property have begun, the Company will begin amortization of the asset. The Company has recorded the full value of the acquisition as intangible
assets. The Company is currently assessing if any further breakdown of assets is necessary.
NOTE 6 – PROPERTY AND EQUIPMENT
Long lived assets, including property and equipment
assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less
than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed
of are reported at the lower of carrying amount or fair value less cost to sell.
Property and equipment are first recorded at cost.
Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets.
Maintenance and repair expenses, as incurred,
are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable
to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Assets stated at cost, less accumulated depreciation consisted of
the following:
| Schedule of property, plant and equipment | |
| | | |
| | |
| | |
December 31
2022 | | |
June 30,
2022 | |
| Mine Assets | |
$ | 450,000 | | |
$ | 450,000 | |
| Property & Equipment: Barotex Equipment | |
| 1,200,000 | | |
| – | |
| Total | |
$ | 1,650,000 | | |
$ | 450,000 | |
Once operations utilizing the property
and equipment have begun, the Company will begin depreciation of the assets.
NOTE 7 – RELATED PARTY TRANSACTIONS
On January 1, 2021, the employment agreements
for Richard Carey and Anthony Anish were updated to include salaries of $180,000 and $120,000 per annum respectively. As of December 31,
2022, the Company has accrued compensation due to Mr. Carey of $113,349 and Mr. Anish of $136,428. As of June 30, 2022, the Company has
accrued compensation due to Mr. Carey of $52,600 and Mr. Anish of $99,828. In addition, the Company has accrued salary to Mr. Baird (a
former officer) of $60,000. Mr. Baird resigned his position on August 12, 2020.
Mr. Carey is using his personal office space at
no cost to the Company.
On August 15, 2022, the Company issued 5,000,000
shares of common stock to Fernando Godina, a Director, for services. The shares were valued at $0.289
per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.
On August 15, 2022, the Company issued 5,000,000
shares of common stock to Bryan Cappelli, Director, for services. The shares were valued at $0.289
per share, the closing stock price on the date of grant, for total non-cash expense of $1,445,000.
On August 15, 2022, the Company issued 5,000,000
shares of common stock to Weverson Correia, CEO and Director, for services. The shares were valued at $0.289 per share, the closing stock
price on the date of grant, for total non-cash expense of $1,445,000.
On August 15, 2022, the Company issued 5,000,000
shares of common stock to Anthony Anish, CFO and director, for services. The shares were valued at $0.289 per share, the closing stock
price on the date of grant, for total non-cash expense of $1,445,000.
On November 17, 2022, Our Chairman, Mr.
Carey sold 4
million of his own shares of common stock in exchange for $42,000
which was loaned to the Company. The loan to the Company is non-interest bearing and due on demand.
On December 5, 2022, the Company issued 1,000,000
shares of common stock to Themis Glatman, Director, for services. The shares were valued at $0.165
per share, the closing stock price on the date of grant, for total non-cash expense of $165,000.
NOTE 8 – NOTES PAYABLE
As of December 31, 2022 and June 30, 2022, the
Company owed Kok Chee Lee, the former CEO and Director of the Company, $42,651 and $42,651, respectively for operating expenses he paid
on behalf of the Company during the year ended June 30, 2018. The borrowing is unsecured, non-interest-bearing and due on demand.
On June 1, 2018, the Company executed a promissory
note in the amount of $32,000 with the former Secretary of the Board for $30,128 of accrued expenses for services previously provided
and an additional $1,872 for services rendered. The note is unsecured, bears interest at 5% per annum and matures on December 1, 2018.
As of December 31, 2022 and June 30, 2022, there is $7,362 and $6,562, respectively, of accrued interest due on the note. The note is
past due and in default.
As of December 31, 2022 and June 30, 2022, the
Company owes various other individuals and entities $98,690 and $119,215, respectively. All the loans are non-interest bearing and due
on demand.
NOTE 9 - CONVERTIBLE NOTES
On March 28, 2022, we received short term financing
from a private investor under a 10% Fixed Convertible Secured Promissory Note in the principal amount of $400,000 (the “Note”).
The Note bears interest at a fixed rate of 10% per annum with all principal and interest due at maturity on July 31, 2022. The Note is
secured by a security interest and lien on all equipment located at our Troy mine in Mariposa County, California. At the option of the
investor, and at any time prior to the maturity date, the principal and interest owing under the Note may be converted into shares of
our common stock at a conversion price equal to 50% of the lowest closing market price for our common stock during the five trading days
preceding the conversion.
On June 8, 2022, the Company executed a 10% convertible
promissory note with Fast Capital LLC (“Fast Capital”). The note is convertible at a price
per share equal to the 65% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days up to
the date on which lender elects to convert all or part of the Note.
A summary of the activity of the derivative liability
for the notes above is as follows:
| Schedule of derivative liabilities | |
| |
| Balance at June 30, 2021 | |
$ |
– | |
| Increase to derivative due to new issuances | |
| 552,517 | |
| Derivative loss due to mark to market adjustment | |
| 136,714 | |
| Balance at June 30, 2022 | |
| 689,231 | |
| Decrease to derivative due to conversion | |
| (63,923 | ) |
| Derivative loss due to mark to market adjustment | |
| 460,682 | |
| Balance at December 31, 2022 | |
$ | 1,085,990 | |
A summary of quantitative information about significant
unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of
the fair value hierarchy as of December 31, 2022, is as follows:
| Schedule of fair value assumptions |
|
|
|
|
|
|
|
|
| Inputs |
|
December 31,
2022 |
|
|
Initial
Valuation |
|
| Stock price |
|
$ |
.041 |
|
|
$ |
.24 - .42 |
|
| Conversion price |
|
$ |
.014 - .019 |
|
|
$ |
.03 - .2995 |
|
| Volatility (annual) |
|
|
139.62% - 212.41% |
|
|
|
256.36% - 381.28% |
|
| Risk-free rate |
|
|
4.42% – 4.69% |
|
|
|
0.59% - 2.29% |
|
| Dividend rate |
|
|
– |
|
|
|
– |
|
| Years to maturity |
|
|
0 - .44 |
|
|
|
.34 - 1 |
|
NOTE 10 – PREFERRED STOCK
Of the 25,000,000
shares of the Company's authorized Preferred Stock, $0.001
(Series A and B) and $1.00 (Series C) par value per share, 1,000,000
are designated Series A preferred stock, 1,900,000
shares are designated as Series B Preferred Stock and 1,000,000
shares are designated Series C preferred stock.
Series A Preferred Stock
Each Share of Series A preferred stock shall have
500 votes per share and each share can be converted into 500 shares of common stock. The holders of the Series A preferred stock are not
entitled to dividends.
On July 2, 2020, the Board granted all 1,000,000
shares of the Series A preferred stock to the Company’s Chairman and CEO, Richard Carey, in conversion of $68,556 of accrued compensation.
Series B Preferred Stock
Only one person or entity, is entitled to be designated
as the owner of all of the Series B Preferred Stock (the “Holder”), in whose name the initial certificates representing the
Series B Preferred Stock shall be issued. Any transfer of the Series B Preferred Stock to a different Holder must be approved in advance
by the Corporation; provided, however, the Holder shall have the right to transfer the Series B Preferred Stock, or any portion thereof,
to any affiliate of Holder or nominee of Holder, without the approval of the Corporation. Each share of Preferred Stock 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 1,883,000
shares of Series B Preferred Stock, the shares were valued at $0.002 or $7,532
as if they had been converted into 3,666,000
shares of common stock.
Series C Preferred Stock
On March 30, 2022, the Company created and
designated 1,000,000
shares of Series C Preferred Stock (“Series C”) with a stated value of $1.00.
The Series C has an annual cumulative dividend of 8%
and has no voting rights. The Series C is convertible into shares of common stock at 65% of the lowest trading price for the ten days
prior to the conversion date.
During the six months ended December 31, 2022,
the Company sold shares of Series C to Geneva Roth Remark Holdings Inc for total proceeds of $104,250.
During the six months ended December 31, 2022,
Geneva Roth converted shares of Series C preferred stock into shares of common stock. The Company recognized a loss
on conversion of $.
NOTE 11 – COMMON STOCK
During the six months ended December 31, 2022,
the Company sold 50,000 shares of common stock for total cash proceeds of $6,250. The funds have not been received as of December 31,
2022.
During the six months ended December 31, 2022,
Fast Capital converted $40,000 of its note payable into 1,538,461 shares of common stock.
Refer to Note 5 for shares issued to related parties.
NOTE 12 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant
to the requirements of ASC Topic 855, from the balance sheet date through the date the unaudited financial statements were issued and
has determined that no material subsequent events exist other than the following.
1. On January 3, 2023, the Company sold 57,750
shares of Series C Preferred shares to Geneva Roth Remark Holdings Inc.
2. On January 17, 2023, the Company sold 56,950
shares of Series C Preferred shares to Geneva Roth Remark Holdings Inc.