UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[x] |
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
For the quarterly period ended September 30, 2018
[ ] |
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
|
|
|
|
| For the transition period from _________ to ___________ |
LONE STAR GOLD, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada |
| 000-54509 |
| 45-2578051 |
(State of Incorporation) |
| (Commission File Number) |
| (IRS Employer Identification No.) |
20311 Chartwell Center Drive Suite 1469
Cornelius, North Carolina 28031
(704) 790-9799
(Address of principal executive offices) (Zip code)
Issuer's telephone number
N/A
(Former name, former address, and former fiscal year, if changed since last report)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [x]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
[ ]
Non-accelerated filer
[ ]
(Do not check if a smaller reporting company)
Accelerated filer
[ ]
Smaller reporting company
[x[
Emerging growth company
[x]
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [x] No [ ]
The number of shares of the registrant's Common Stock outstanding as of October 16, 2018 was 143,361,963.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017 | F-2 |
|
|
Consolidated Statements of Operations for the quarters ended September 30, 2018 and 2017 | F-3 |
|
|
Consolidated Statements of Cash Flows for the quarters ended September 30, 2018 and 2017 | F-4 |
|
|
Notes to Consolidated Financial Statements | F-5 |
LONE STAR GOLD, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
| September 30, |
| December 31, | ||||
|
| 2018 |
| 2017 | ||||
ASSETS |
|
|
|
| ||||
|
|
|
|
| ||||
Current assets |
|
|
|
| ||||
Cash | $ |
| $ | - | ||||
Prepaid expenses |
|
|
| - | ||||
Property and equipment, net |
|
|
| - - | ||||
Mining assets |
|
|
| - | ||||
Total assets |
|
|
| - | ||||
|
|
|
|
| ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
| ||||
|
|
|
|
| ||||
Current liabilities |
|
|
|
| ||||
Accounts payable |
| - |
| 109,495 | ||||
Accrued liabilities |
| - |
| 55,507 | ||||
Note payable |
| 45,778 |
| 45,778 | ||||
Derivative liability |
| 289,740 |
| 289,740 | ||||
Due to related party |
| 38,910 |
| 38,910 | ||||
Total liabilities |
| 374,428 |
| 539,430 | ||||
|
|
|
|
| ||||
Stockholders' equity |
|
|
|
| ||||
Common stock |
| 143,262 |
| 143,262 | ||||
Additional paid-in capital |
| 5,398,908 |
| 5,398,908 | ||||
Accumulated deficit |
| (5,896,911) |
| (6,061,913) | ||||
Non-controlling interest in subsidiary |
| (19,687) |
| (19,687) | ||||
Total stockholders' deficit |
| (374,428) |
| (539,430) | ||||
Total liabilities and stockholders' deficit | $ | - | $ | - | ||||
|
|
|
|
| ||||
|
|
|
|
| ||||
|
|
|
|
| ||||
The accompanying notes are an integral part of these financial statements. | ||||||||
F-2
LONE STAR GOLD, INC.
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
| |||||||
|
| For the Nine Months Ended | |||||||
|
| September 30, 2018 |
| September 30, 2017 | |||||
Revenue | $ | -- | $ | - | |||||
Operating Expenses |
| -- |
| 750 | |||||
Loss from operations |
| -- |
| (750) | |||||
Other income (expense) |
| -- |
| - | |||||
Income (loss) from discontinued operation |
| 165,002 |
|
| |||||
Net Income (Loss) |
|
|
| (750) | |||||
Net Income (loss) attributable to non-controlling interest |
| -- |
| - | |||||
Net Income (loss) attributable to Lone Star Gold, Inc. | $ | 165,002 | $ | (750) | |||||
|
|
|
|
| |||||
Income(Loss) per share - basic and diluted | $ | 0.001 |
| (0.00) | |||||
Weighted average shares - basic and diluted |
| 143,361,963 |
| 143,361,963 | |||||
|
|
|
| ||||||
| |||||||||
| |||||||||
| |||||||||
The accompanying notes are an integral part of these financial statements.
F-3
LONE STAR GOLD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
| For the Nine Months Ended |
| |||||
|
| September 30, 2018 |
|
| September 30, 2017 |
| ||
|
|
|
|
|
|
| ||
Operating Activities |
|
|
|
|
|
| ||
Net income (loss) |
| $ | - |
|
| $ | (750 | ) |
Non-cash adjustments to reconcile net loss to net cash: |
|
| - |
|
|
|
|
|
Net income from discontinued operations |
|
| - |
|
|
| - |
|
Accounts payable and accrued liabilities |
|
| - |
|
|
| 750 |
|
Net Cash Used in Operating Activities |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Net Cash used in Investing Activities |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from sale of common stock |
|
| - |
|
|
| - |
|
Proceeds from issuance of notes payable |
|
| - |
|
|
| - |
|
Repayments of notes payable |
|
| - |
|
|
| - |
|
Net Cash Provided by Financing Activities |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
|
|
|
| - |
|
Cash - Beginning of Period |
|
| - |
|
|
| - |
|
Cash - End of Period |
| $ | - |
|
| $ | - |
|
The accompanying notes are an integral part of these financial statements.
F-4
LONE STAR GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2018
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS AND DISCONTINUANCE OF BUSIENSS
Lone Star Gold, Inc. (the "Company" or "Lone Star"), formerly known as Keyser Resources, Inc., was incorporated in the State of Nevada on November 26, 2007. The Company is an Exploration Stage Company as defined by Financial Accounting Standards Board Accounting Standards Codification ("ASC") Topic 915 Development Stage Entities.
Shortly after September 30, 2013, the Company ceased operation as it was in default of certain creditor obligations. In 2017, the Company was put into receivership to satisfy those outstanding creditor claims.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| (a) | Non-controlling Interests |
Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in represented in the consolidated balance sheets as a component of stockholders' equity. Non-controlling interests in the results of operations of the Company are presented in the face of the statement of operations as an allocation of the total profit or loss between non-controlling interests and the shareholders of the Company.
| (b) | Basis of Presentation |
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company's fiscal year-end is December 31. All intercompany transactions have been eliminated. In the view of management these interim financial statements contain all of the necessary adjustments and estimates to make them not misleading.
| (c) | Use of Estimates |
The preparation of financial statements in conformity with U.S. 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. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
| (d) | Net Loss Per Common Share |
The Company computes net income or loss per share in accordance with ASC 260 Earnings per Share. Under the provisions of the Earnings per Share Topic ASC, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
F - 5
| (e) | Income Taxes |
The Company accounts for its income taxes in accordance with ASC 740 Income Taxes, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards as realization cannot be determined to be more likely than not.
The statement establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions which meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns and the adoption of the statement had no material impact to the Company's consolidated financial statements. The Company files tax returns in the US and states in which it has operations and is subject to taxation. Tax years subsequent to 2013 remain open to examination by U.S. federal and state tax jurisdictions.
| (f) | Discontinued operations |
We discontinued operations during the year ended December 31, 2013. All operations prior to that have been presented in the statement of operations and the cash flow statement as net income or loss from discontinued operations. In fact, we had no assets related to an operating business as of September 30, 2018
NOTE 3 – GOING CONCERN
The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company is unable to continue as a going concern.
The Company’s financial statements have been prepared on the basis that the Company has ceased operations for the time being and is in the process of pursuing business opportunities for the Company to resume as a going concern.
As reflected in the consolidated financial statements, the Company had an accumulated deficit of $5,896,911 at September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern in the future once it acquires a viable entity.
NOTE 4 – SUBSEQUENT EVENTS
The Company filed a disclosure on Form 8-K on July 23, 2018 with the SEC, disclosing that it had filed articles of amendment to affect a 100:1 reverse split. An application with FINRA has been filed, and the Company is awaiting approval to affect the reverse split.
The Company filed a disclosure on Form 8-K on October 9, 2018 with the SEC. The Company has determined that the direction it wishes to take is to pursue operations in the Cannabidiol ("CBD") business. CBD oil is the most popular cannabinoid for preventing and/or treating a variety of health conditions. Cannabinoids are a natural chemical constituent of cannabis and hemp.
To that end, the Company plans to:
o employ seasoned executives to manage the operations of the Company;
o change its name and symbol to better reflect its new business plan;
and
o make acquisitions of CBD businesses and related CBD services.
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
During the quarter ended September 30, 2018 and the two years ended December 31, 2017 and 2016, the Company was inactive. As a result of its inactivity, the Company generated no revenue, had no expenses and had no assets for the years ended December 31, 2017 and 2016 and for the nine months ended September 30, 2018. Following the close of the receivership, the Company had no liabilities other than long term debt as indicated on the balance sheets.
The Company did not, as of September 30, 2018, have any significant capital requirements.
The Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way.
The Company does not know of any significant changes in expected sources and uses of cash.
The Company does not have any commitments or arrangements from any person to provide it with any equity capital.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of September 30, 2018, these disclosure controls and procedures were effective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
There have been no significant changes in our internal controls over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
We are not aware of any pending or threatened legal proceedings which involve the Company.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
31.1 | Certification by the Principal Executive Officer |
31.2 | Certification by the Principal Financial Officer |
32.1 | Certification by the Principal Executive and Financial Officers |
SIGNATURES
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.
LONE STAR GOLD, INC.
Dated: October 22, 2018
By: /s/ William Alessi
William Alessi
Chief Executive, Financial and Accounting Officer
EXHIBIT 31
CERTIFICATIONS
I, William Alessi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lone Star Gold, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant's internal control over financial reporting.
October 22, 2018
/s/ William Alessi
William Alessi, Principal Executive Officer
CERTIFICATION
I, William Alessi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lone Star Gold, Inc..
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant's internal control over financial reporting.
October 22, 2018
/s/ William Alessi
William Alessi, Principal Financial Officer
EXHIBIT 32
CERTIFICATION
In connection with the Quarterly Report of Lone Star Gold, Inc. (the "Company") on Form 10-Q for the quarter ending September 30, 2018 as filed with the Securities and Exchange Commission (the "Report"), William Alessi, the Company’s Principal Executive and Financial Officer, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2013, that to the best of their knowledge:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of the Company.
October 22, 2018
/s/ William Alessi
William Alessi, Principal Executive and Financial Officer