Notes
to Unaudited Condensed Financial Statements
March 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 is now acquiring new environmentally safe technology to extract gold and other rare earth minerals form
oxide rock.
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, 2021, 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 March 31, 2022:
March 31, 2022:
| Schedule Of Fair Value, Liabilities Measured on Recurring Basis | |
| | | |
| | | |
| | |
| Description | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Derivative | |
$ | – | | |
$ | – | | |
$ | 650,113 | |
| Total | |
$ | – | | |
$ | – | | |
$ | 650,113 | |
NOTE 3 – GOING CONCERN
The unaudited 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 unaudited financial
statements, the Company has an accumulated deficit of $12,593,705 as of March 31, 2022. For the nine months ended March 31, 2022 the Company
had a net loss of $9,420,914, with $1,398,871 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.
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 1,883,000 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 Corporation 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 S-1 registration
was filed on August 14, 2020.
On July 14, 2020 a contract extension was agreed
between Star Alliance International Corporation and Troy Mining Corporation. The agreement provides for a sixty-day extension on the loan
agreement with Troy mining Corporation and also an extension to file the S-1 registration.
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 to $330,000 as of December 31, 2021.
On October 21, 2021, a contract extension for
ninety (90) days was signed between Troy Mining Corporation and Star Alliance International Corporation. A payment of $20,000 was made
by Star Alliance that reduces the final amount due to Troy Mining Corporation to $310,000.
On January 2, 2022 The Company acquired a 51%
interest in Compania Minera Metalurgica Centro Americana S.A. (“Commsa”) which owns 5 gold mines in Honduras. The purchase
price is $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.
NOTE 5 – 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 March 31, 2022,
the Company has accrued compensation due to Mr. Carey of $114,862 and Mr. Anish of $128,778. As of June 30, 2021, the Company has accrued
compensation due to Mr. Carey of $48,628 and Mr. Anish of $126,778. 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.
As of December 31, 2021, the Company owes Mr.
Anish $4,550 for cash advances to pay for certain operating expenses.
As of December 31, 2021, the Company owes Mr.
Carey $20,000 for a cash advance that was paid to Troy Mining Corporation (Note 4).
On January 10, 2022, the Company issued 1,000,000
shares of common stock to Themis Glatman, director, for services. The shares were valued at $1.40 per share, the closing stock price on
the date of grant, for total non-cash expense of $1,400,000.
On January 24, 2022, the Board of Directors appointed
Mr. Weverson Correia as the Chief Executive Officer and a Director of the Company. Mr. Correia was issued 500,000 shares of common stock
on December 16, 2021. The shares were valued at $1.55 per share, the closing stock price on the date of grant, for total non-cash expense
of $772,500.
NOTE 6 – NOTES PAYABLE
As of December 31, 2021, and June 30, 2021, the
Company owed Kok Chee Lee, the former CEO and Director of the Company, $42,651 and $42,651, respectively for operating expenses he paid
on behalf of the Company during the year ended June 30, 2018. The borrowing is unsecured, non-interest-bearing and due on demand.
On June 1, 2018, the Company executed a promissory
note in the amount of $32,000 with the former Secretary of the Board for $30,128 of accrued expenses for services previously provided
and an additional $1,872 for services rendered. The note is unsecured, bears interest at 5% per annum and matures on December 1, 2018.
As of March 31, 2022 and June 30, 2021, there is $6,159 and $4,949, respectively, of accrued interest due on the note. The note is past
due and in default.
On June 11, 2019, the company executed a promissory
note with Troy for $500,000 (Note 7). The Company paid the initial $50,000 due on the note on August 13, 2019, $35,000 as of December
31, 2019 and $20,000 on October 21, 2021. As March 31, 2022 there is $310,000 due on this note (Note 4).
On June 26, 2020, an individual loaned the Company
$25,000, $6,000 of which was converted into 600,000 shares of common stock on July 27, 2020. On February 24,2021, he loaned an additional
$20,000 to the Company. During April 2021, another $14,000 was converted into 1,400,000 shares of comm on stock. As of March 31, 2022,
there is $25,000 and $10,734 of principal and interest due on this loan, respectively.
As of March 31, 2022, the Company owes various
other individuals and entities a total of $190,804. All the loans are non-interest bearing and due on demand.
NOTE 6 - CONVERTIBLE NOTE
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 at 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.
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 | |
| 179,478 | |
| Derivative loss due to mark to market adjustment | |
| 470,635 | |
| Balance at March 31, 2022 | |
$ | 650,113 | |
A summary of quantitative information about significant
unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of
the fair value hierarchy as of March 31, 2022 is as follows:
| Schedule of fair value assumptions | |
| | | |
| | |
| Inputs | |
March 31,
2022 | | |
Initial
Valuation | |
| Stock price | |
$ | .49 | | |
$ | .42 | |
| Conversion price | |
$ | .21 | | |
$ | 0.2995 | |
| Volatility (annual) | |
| 232.22% | | |
| 256.36% | |
| Risk-free rate | |
| .52% | | |
| .59% | |
| Dividend rate | |
| – | | |
| – | |
| Years to maturity | |
| .33 | | |
| .34 | |
NOTE 7 – PREFERRED STOCK
Of the 25,000,000 shares of the Company's authorized
Preferred Stock, $0.001 par value per share, 1,000,000 are designated Series A preferred stock and 1,900,000 shares are designated as
Series B 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.
On October 9, 2019, the parties have agreed to
extend the date for filing the registration statement relating to the preferred shares of the Company to be issued to the Troy shareholders
and that would in turn extend the date that the shares would become free trading. This extension will be for 150 days for filing the registration
statement and obtaining approval for the shares to become free trading. All the remaining terms included in the contract will remain the
same.
Series C Preferred Stock
One Million shares of Series C Preferred Stock
at $1.00 per share was authorized on March 30, 2022. No shares were issued prior to March 31, 2022. Series C Preferred shares have no
voting rights on any matters with the exception of any matters relating to the Series C Preferred stock. In any vote on the preferred
stock the shareholders have a one vote per share.
NOTE 8 – COMMON STOCK
During the year ended June 30, 2021, the Company
granted 1,250,000 shares of common stock for services. The shares were valued at $0.02 per share for total non-cash expense of $25,000.
During the year ended June 30, 2021, the Company
issued 1,375,000 shares of common stock in conversion of a $83,500 of principal. The Company recognized a $46,200 loss on the conversion.
During the year ended June 30, 2021, the Company
sold 9,381,000 shares of common stock for total cash proceeds of $129,400, $20,000 of which is a receivable as of June 30, 2021. In addition,
the Company has common stock be issued from the sale of $41,633.
During the six months ended December 31, 2021,
the Company granted 4,444 shares of common stock for services. The shares were valued at $4.50 per share, based on the value of the services
as provided by the services provider’s invoice, for total non-cash expense of $20,000. The $20,000 is being amortized over the one-year
service term for the services being provided.
During the six months ended December 31, 2021,
the Company granted 4,000,000 shares of common stock for services. The shares were valued at $0.50 per share, based on the value of the
services as provided by the services provider’s invoice, for total non-cash expense of $2,000,000. The $2,000,000 is being amortized
over the one-year service term for the services being provided.
During the six months ended December 31, 2021,
the Company granted 10,000 shares of common stock for services. The shares were valued at $1.12 per share, the closing stock price on
the date of grant, for total non-cash expense of $11,200.
During the six months ended December 31, 2021,
the Company granted 52,000 shares of common stock for services. The shares were valued at $1.55 per share, the closing stock price on
the date of grant, for total non-cash expense of $80,600.
During the six months ended December 31, 2021,
the Company granted 1,500,000 shares of common stock for services. The shares were valued at $1.55 per share, the closing stock price
on the date of grant, for total non-cash expense of $2,317,500. The $2,317,500 is being amortized over the one-year service term for the
services being provided.
During the six months ended December 31, 2021,
the Company granted 500,000 shares of common stock for services. The shares were valued at $1.55 per share, the closing stock price on
the date of grant, for total non-cash expense of $775,500.
During the three months ended March 31, 2022,
the Company granted 6,600,000 shares of common stock for services. The shares were valued at the closing stock price on the date of grant,
for total non-cash expense of $2,980,700.
During the three months ended March 31, 2022,
the Company issued 300,000 shares of common stock in conversion of $52,180 of debt. A loss of $343,120 was recognized on the conversion.
During the nine months ended March 31, 2022,
the Company sold 16,885,000
shares of common stock for total cash proceeds of $1,634,000.
Of the stock sold $160,000
is still to be received. Of the shares issued it has been determined that $500,000 will not be received. The Company is in the
process of having the 5,000,000 shares returned. The Company also issued 4,770,000
shares that were sold in the prior year.
NOTE 9 – 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 no material subsequent events exist other than the following.
1/. In April, 2022 Star paid the remaining balance
due for purchase of the assets and mining leases of the Troy Mine.
2/. In April, 2022 there were changes to the
Board of Director. Bryan Cappeilli was appointed to the Board and Alexei Tchernov was removed from the Board.
3/. In April 2022 Star issued 153,750 Series
C Preferred shares at $1.00 per share in a convertible note that is due for repayment 180 days from the date of issuance. These shares
may be converted into common stock of Star or the note can be paid in full with interest at 25%.
3/. In May 2022, Star acquired 51% of NSM USA,
a Wyoming corporation that owns the rights to 4 lithium mines located in Africa. Star has agreed to invest $2 million to pay for equipment
and some infrastructure to speed up the mining process.
4/. In May 2022, Star acquired 51% of NGM USA,
a Wyoming corporation that owns the rights to 3 Gold mines located in Africa. Star has agreed to invest $2 million to pay for equipment
and some infrastructure to speed up the mining process.
5/. In May 2022, Star completed its due diligence
on the Genesis, gold extraction process and is now moving forward to close the acquisition of 51% of assets of the Guatemala corporation
that owns the technology
NOTE 10 – SIGNIFICANT TRANSACTIONS
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 are expected to be producing gold in the second quarter of 2022 and will be expanded during the
year. Gold resources are estimated to be in excess of 1 million oz. This estimate came from a limited appraisal of the area in which the
mines are located.
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.
Upon close, STAR will, once mining operations begin, start to generate
significant revenues and of utmost importance the mine will be able to gain all the benefits of our Green, Environmentally Safe
Genesis ore extraction process. 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.