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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

Form 10-Q

 

.Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended

March 31, 2024.

 

.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:  333-151300

 

SPIRITS TIME INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada (NV)

 

20-3455830

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

1661 Lakeview Circle

Ogden, Utah 84403

(801) 399-3632

 (Registrant’s address and telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: NONE

 

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 x. No ¨.

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted  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 such files).  Yes x. No ¨.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 x.

 

Smaller reporting company .

Emerging growth company .  

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨.

 

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). Yes .  No x.

 

The number of shares outstanding of the issuer’s common stock, $0.001 par value was 7,498,305 on May 20, 2024.


4 


SPIRITS TIME INTERNATIONAL, INC.

 

INDEX

 

 

Page

 

Number

PART I - FINANCIAL INFORMATION

3

 

 

Item 1 – Condensed Financial Statements (Unaudited)

3

 

 

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

4

 

 

Item 3 – Quantitative and Qualitative Disclosure About Market Risk

7

 

 

Item 4 – Controls and Procedures

7

 

 

PART II – OTHER INFORMATION

8

 

 

Item 1 - Legal Proceedings

8

 

 

Item 1A–Risk Factors

8

 

 

Item 2 – Unregistered Sales of  Equity Securities and Use of Proceeds

8

 

 

Item 3 - Defaults upon Senior Securities

8

 

 

Item 4 – Mine Safety Disclosures

9

 

 

Item 5 - Other Information

9

 

 

Item 6 – Exhibits

10

 

 

Signatures

10

 

 

Index to Exhibits

10

 

 

 


5 


 

 

 

PART I ― FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These statements are based on management’s beliefs and assumptions, and on information currently available to management.  Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance.  They involve risks, uncertainties, and assumptions.  Our future results and shareholder values may differ materially from those expressed in these forward-looking statements.  Readers are cautioned not to put undue reliance on any forward-looking statements.  

 

Item 1. – Financial Statements

 

As used herein, the terms “Spirits Time,” “we,” “our,” and “us” refer to Spirits Time International, Inc., a Nevada corporation, unless otherwise indicated. The condensed unaudited financial statements of the registrant for the three months ended March 31, 2024 and 2023 follow. The condensed unaudited financial statements reflect all adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  All such adjustments are of a normal and recurring nature.


6 


 

  SPIRITS TIME INTERNATIONAL, INC.

March 31, 2024

 

INDEX TO FINANCIAL STATEMENTS

(Unaudited)

 

 

 

Page(s)

Condensed Balance Sheets (Unaudited)

F-2

 

 

 

Condensed Statements of Operations (Unaudited)

F-3

 

 

 

Condensed Statements of Stockholders’ Deficit (Unaudited)

F-4

 

 

Condensed Statements of Cash Flows (Unaudited)

F-5

 

 

Notes to the Condensed Financial Statements (Unaudited)

F-6

 

 


F-1 


 

SPIRITS TIME INTERNATIONAL, INC.

Condensed Balance Sheets

(Unaudited)

 

 

 

March 31,

 

December 31,

 

 

2024

 

2023*

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$1,994  

 

$493  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Current Assets

1,994  

 

493  

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

 

 

 

 

Intangible assets

-  

 

-  

 

 

 

 

 

 

 

 

TOTAL ASSETS

$1,994  

 

$493  

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

Accounts payable

$218,655  

 

$207,775  

 

Accounts payable - related party

1,000  

 

9,500  

 

Accrued interest

372,971  

 

351,285  

 

Accrued interest - related parties

160,717  

 

164,819  

 

Loans payable - related parties

279,200  

 

271,675  

 

Convertible notes payable - related parties

55,000  

 

55,000  

 

Convertible note payable

290,000  

 

290,000  

 

Notes payable

110,000  

 

85,000  

 

 

 

 

 

 

 

 

Total Current Liabilities

1,487,543  

 

1,435,054  

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

1,487,543  

 

1,435,054  

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

-  

 

-  

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 20,000,000 shares authorized
Preferred stock designated, Series A, $0.001 par value, 1,000,000
shares authorized, 450,000 shares issued and outstanding

450  

 

450  

 

Preferred stock designated, Series D, $0.001 par value, 50,000
shares authorized, 5,000 shares issued and outstanding

5  

 

5  

 

Common stock, $0.001 par value; 140,000,000 shares
authorized, 7,498,305 shares issued and outstanding

7,498  

 

7,498  

 

Additional paid-in capital

986,354  

 

986,354  

 

Accumulated deficit

(2,479,856) 

 

(2,428,868) 

 

 

 

 

 

 

 

 

Total Stockholders' Deficit

(1,485,549) 

 

(1,434,561) 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS'  DEFICIT

$1,994  

 

$493  

 

 

*Derived from audited information

 

 

 

The accompanying notes are an integral part of these condensed unaudited financial statements.


F-2 


 

SPIRITS TIME INTERNATIONAL, INC.

Condensed Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

2024

 

2023

 

 

 

 

 

 

NET REVENUES

$-  

 

$-  

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

Professional fees

17,082  

 

18,526  

 

Selling, general and administrative

2,322  

 

2,079  

 

 

 

 

 

 

 

 

Total Operating Expenses

19,404  

 

20,605  

 

 

 

 

 

 

LOSS FROM OPERATIONS

(19,404) 

 

(20,605) 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

 

 

 

 

 

 

Interest expense

(31,584) 

 

(29,546) 

 

 

 

 

 

 

 

 

Total Other Income (Expenses)

(31,584) 

 

(29,546) 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

(50,988) 

 

(50,151) 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

-  

 

-  

 

 

 

 

 

 

NET LOSS

$(50,988) 

 

$(50,151) 

 

 

 

 

 

 

NET LOSS PER SHARE - BASIC AND DILUTED

$(0.01) 

 

$(0.01) 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC AND DILUTED

7,498,305  

 

7,361,005  

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed unaudited financial statements.


F-3 


SPIRITS TIME INTERNATIONAL, INC.

Condensed Statements of Stockholders' Deficit

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Total

 

 

Preferred Stock A

 

Preferred Stock D

 

Common Stock

 

Paid-In

 

Accumulated

 

Stockholders'

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

450,000 

 

$450 

 

5,000 

 

$5 

 

7,498,305 

 

$7,498 

 

$986,354 

 

$(2,428,868) 

 

$(1,434,561) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2024

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

 

(50,988) 

 

(50,988) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2024

 

450,000 

 

$450 

 

5,000 

 

$5 

 

7,498,305 

 

$7,498 

 

$986,354 

 

$(2,479,856) 

 

$(1,485,549) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Total

 

 

Preferred Stock A

 

Preferred Stock D

 

Common Stock

 

Paid-In

 

Accumulated

 

Stockholders'

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

450,000 

 

$450 

 

5,000 

 

$5 

 

7,361,005 

 

$7,361 

 

$962,120 

 

$(1,956,350) 

 

(986,414) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2023

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

 

(50,151) 

 

(50,151) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2023

 

450,000 

 

$450 

 

5,000 

 

$5 

 

7,361,005 

 

$7,361 

 

$962,120 

 

$(2,006,501) 

 

$(1,036,565) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed unaudited financial statements.


F-4 


 

SPIRITS TIME INTERNATIONAL, INC.

Condensed Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

$(50,988) 

 

$(50,151) 

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

used by operating activities:

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued interest

 

 

 

 

32,566  

 

33,063  

 

Accounts payable - related party

 

 

 

 

(8,500) 

 

1,500  

 

Accrued interest - related parties

 

 

 

 

(4,102) 

 

8,679  

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Used by Operating Activities

 

 

 

 

(31,024) 

 

(6,909) 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

-  

 

-  

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from notes payable

 

 

 

 

25,000  

 

-  

 

Proceeds from loans payable - related parties

 

 

 

 

7,525  

 

6,900  

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

 

 

 

32,525  

 

6,900  

 

 

 

 

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

 

1,501  

 

(9) 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

 

493  

 

707  

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

 

$1,994  

 

$698  

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

 

 

 

$14,000  

 

$-  

 

Cash paid for income taxes

 

 

 

 

$-  

 

$-  

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed unaudited financial statements.


F-5 


SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

 

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial statements at March 31, 2024 and for all periods presented have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed unaudited financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2023 audited financial statements.  The results of operations for the period ended March 31, 2024 are not necessarily indicative of the operating results for the full year.

 

Loss Per Share - The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. At March 31, 2024 the Company had no warrants outstanding, and convertible debt outstanding that is convertible into 5,521,621 shares of common stock. During the three months ended March 31, 2023, the Company had warrants outstanding that were exercisable into 264,084 shares of common stock, and convertible debt outstanding that was convertible into 2,800,040 shares of common stock.  The common stock issuable from the warrants and convertible debt was not included, as it would be anti-dilutive due to continuing losses.

 

Three Months Ended

Loss (Numerator)

Shares (Denominator)

Per Share Amount

March 31, 2024

$               (50,988)

7,498,305

$             (0.01)

March 31, 2023

$               (50,151)

7,361,005

$             (0.01)

 

NOTE 2 – INTANGIBLE ASSETS

 

Intangible assets consist of the Tequila Alebrijes brand name, trademark, and property rights. For the year ended December 31, 2023 we recorded an impairment loss of $275,000. As of March 31, 2024 and December 31, 2023, the Company had intangible assets of $0.

NOTE 3 - GOING CONCERN

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has had no revenues and has generated losses from operations. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern.  The continuance of the Company as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.


F-6 


 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.

 

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4 – RELATED PARTY LOANS AND OTHER TRANSACTIONS

 

During the three months ended March 31, 2024 and 2023, the Company received loans in the amount of $7,525 and $6,900, respectively, from related parties of the Company.  These loans accrue interest at the rate of 12% per annum, are due on demand and are not convertible into common stock of the Company.  The balances due on non-convertible loans payable to related parties were principal of $279,200 and $271,675 plus accrued interest of $104,595 and $110,338 as of March 31, 2024 and December 31, 2023, respectively.  During the three months ended March 31, 2024 and 2023, interest in the amount of $14,000 and $0, respectively, was paid.

 

Beginning August 2017, the Company entered into an oral agreement to pay the Company’s sole director $500 per month as payment for use of his personal residence as the Company’s office and mailing address.  The Company has recorded rent expense of $1,500 during each of the three months ended March 31, 2024 and 2023 which is included in the selling, general and administrative expenses on the statements of operations. The amount payable at December 31, 2023 was $9,500. During the three months ended March 31, 2024 the Company paid $10,000, resulting in $1,000 payable at March 31, 2024.

 

In March 2014, the Company issued a $40,000 convertible promissory note to the sole officer and director of the Company and a $15,000 convertible promissory note to another affiliated shareholder (the “Convertible Notes”). On October 11, 2022 this unaffiliated individual was appointed as a director of the Company. The Convertible Notes had a term of one year expiring March 2015, are now payable on demand, and accrue interest at the rate of 12% per annum. The holders of the Convertible Notes, may, at their option, convert all or any portion of the outstanding principal balance of, and all accrued interest on the Convertible Notes into shares of the Company’s common stock, par value $0.001 per share, at a conversion rate of $1.00 per share.  During the year ended December 31, 2019, $10,000 of accrued interest was converted into 5,000 shares of Preferred Stock.  No principal has been paid on these Notes.  As of March 31, 2024 and December 31, 2023, the balance due to these related parties for these Notes was principal of $55,000 and accrued interest of $56,122 and $54,481, respectively.


F-7 


 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

Convertible notes and loans payable – related parties consisted of the following:

 

 

March 31,

2024

 

December 31, 2023

Loans payable to related parties, interest at 12%  per annum, due on demand

 

$279,200  

 

$271,675  

Convertible notes payable to related parties, interest at 12% per annum, due on March 7, 2015 (in default), convertible into common stock at $1.00 per share

 

55,000  

 

55,000  

Total Convertible Notes and Loans Payable – Related Parties

 

334,200  

 

326,675  

Less: Current Portion

 

(334,200) 

 

(326,675) 

Long-Term Convertible Notes and Loans Payable – Related Parties

 

$-  

 

$-  

 

Accrued interest on the convertible notes and loans payable, related parties was $160,717 and $164,819 at March 31, 2024 and December 31, 2023, respectively.  The Company did not record beneficial conversion feature elements on the related party convertible debt due to the conversion rate of $1.00 per share being greater than the fair market value of the underlying shares on the date of issuance.

 

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

 

The Company has a collateralized convertible debt obligation with an unaffiliated entity outstanding at March 31, 2024 and December 31, 2023 as follows:

 

Note (A)

 

Principal(1)

 

Less Debt Discount

 

Plus Premium

 

Net Note Balance

 

Accrued Interest

 

 

 

 

 

 

 

 

 

 

 

March 31, 2024

 

$         290,000

 

$                    -

 

$                 -

 

$         290,000

 

$        338,970

December 31, 2023

 

$         290,000

 

$                    -

 

$                 -

 

$         290,000

 

$        319,918

 

(1)Collateralized by the Company’s assets, including accounts receivable, cash and equivalents, inventory, property, equipment, intangibles.  At March 31, 2024 and December 31, 2023, the Company’s assets consisted of cash and equivalents of $1,994 and $493, respectively, for total carrying value of $1,994 and $493, respectively. 

 

(A)On September 24, 2018 (the “Date of Issuance”) the Company issued a convertible promissory note (the “Note”) with a face value of $300,000, maturing on September 24, 2019, and a stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company's common stock, based on a conversion rate of 50% of the lowest trading price for the 25 days prior to conversion. This note is currently in default (Note 7). 


F-8 


 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

 

 

Along with the Note, on the Date of Issuance the Company issued 42,857 Common Stock Purchase Warrants (the “Warrants”), exercisable immediately at a fixed exercise price of $3.50 with an expiration date of September 24, 2023.  The note proceeds of $300,000 were allocated between the fair value of the promissory note ($300,000) and the Warrants ($86,750), resulting in a debt discount of $67,292.  As the warrants were exercisable immediately, this debt discount was amortized in its entirety to interest expense on the Date of Issuance. The Warrants expired September 24, 2023.

 

NOTE 6 – NOTES PAYABLE

 

Notes payable consisted of the following:

 

 

March 31,

2024

 

December 31, 2023

 

 

 

 

 

Note payable to an unrelated individual, interest at 12% per annum, issued August 1, 2018 due November 15, 2018 (in default), unsecured

 

$10,000  

 

$10,000  

Note payable to an unrelated individual, interest at 12% per annum, issued December 31, 2018 due December 31, 2019 (in default), unsecured

 

30,000  

 

30,000  

Note payable to an unrelated individual, interest at 12% per annum, issued May 1, 2020 due May 1, 2021 (in default), unsecured

 

5,000  

 

5,000  

Note payable to an unrelated individual, interest at 10% per annum, issued January 20, 2021 due January 20, 2022 (in default), unsecured

 

10,000  

 

10,000  

Note payable to an unrelated individual, interest at 8% per annum, issued March 18, 2022 due March 18, 2023 (in default), unsecured

 

10,000  

 

10,000  

Note payable to an unrelated entity, interest at 8% per annum, issued April 20, 2022 due April 20, 2023 (in default), unsecured

 

10,000  

 

10,000  

Note payable to an unrelated entity, interest at 10% per annum, issued April 18, 2023 due April 18, 2024, unsecured

 

8,000  

 

8,000  

Note payable to an unrelated entity, interest at 10% per annum, issued September 11, 2023 due September 11, 2024, unsecured

 

2,000  

 

2,000  

Note payable to an unrelated entity, interest at 10% per annum, issued February 2, 2024 due February 2, 2025, unsecured

 

25,000  

 

-  

 

 

 

 

 

Total Notes Payable

 

110,000  

 

85,000  

Less: Current Portion

 

(110,000) 

 

(85,000) 

Long-Term Notes Payable

 

$-  

 

$-  

 

Accrued interest and interest expense for these Notes as of and for the three months ended March 31, 2024 totaled $34,001 and $2,634, respectively.  Accrued interest and interest expense for these Notes as of and for the year ended December 31, 2023 totaled $31,367 and $8,624, respectively.


F-9 


 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

NOTE 7 – COMMITMENTS AND CONTINGENCIES

 

Promissory Note Default

 

On April 25, 2019, the Company received a demand letter from the legal counsel representing the third-party investor holding Note (A) from Note 5 that stated, among other things, that the Company has defaulted on Note (A).  The demand letter further stated that as a result of such breaches and the default remedy provisions of Note (A) set forth therein, as of April 25, 2019, the Company, owed the noteholder at least $490,767, comprised of outstanding principal of $300,000, accrued interest of $12,178, and liquidated damages of $178,589.

 

We have communicated with the noteholder regarding these matters and are under advisement from our legal counsel that, although we have defaulted on Note (A) and as such are accruing the default interest of 24% as stated within Note (A), we are not otherwise in breach of Note (A).  We are unable to predict whether we will be able to enter into a workable resolution with the noteholder.  If not, the noteholder could commence collection action against the Company and seek to foreclose on our assets and seek other remedies.  We and our legal counsel believe the likelihood of this action is remote, and therefore have not accrued for any potential damages at March 31, 2024 and December 31, 2023.

 

NOTE 8 – EQUITY TRANSACTIONS

 

Common Stock

 

The Company has authorized 140,000,000 shares of common stock with a par value of $0.001.  There were no common stock transactions during the three months ended March 31, 2024 or 2023, resulting in 7,498,305 common shares issued and outstanding at March 31, 2024 and December 31, 2023.

 

Preferred Stock

 

The Company has authorized 20,000,000 shares of Preferred Stock. On May 20, 2022, the Company designated 1,000,000 shares of Series A Preferred Stock (“Series A”) with par value of $0.001. Each share of Series A participates in liquidation equal to common stock, is convertible into common stock at the option of the holder on a ten-for-one basis and carries no common votes unless and until converted to common stock at which time the converted shares are entitled to vote on any matter submitted to common stockholders. The Series A shares are not entitled to dividends unless and until converted to common stock at which time they would have dividend rights as common stock holders. The Company had 450,000 shares of Series A Preferred issued and outstanding at March 31, 2024 and December 31, 2023.

 

The Company has also designated 50,000 shares as Series D Preferred Stock (“Series D”) with par value of $0.001. Each share of Series D participates in dividends and liquidation equal to common stock, is convertible into common stock at the option of the holder on a one-for-one basis and carries 10,000 common votes on any matter submitted to common stockholder vote. The Company had 5,000 shares of Series D issued and outstanding at March 31, 2024 and December 31, 2023.

 

NOTE 9 – SUBSEQUENT EVENTS

 

On April 16, 2024, the parties completed execution of an amendment to Note (A) from Note 5 and Note 7 as further described in the Company’s Form 8-K filed April 22, 2024.

 

On April 17, 2024, the Company issued 200,000 shares of Preferred Series A stock to unaffiliated individuals for review of potential business opportunities.


F-10 


Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations

 

FORWARD LOOKING STATEMENTS

 

This report contains forward-looking statements that involve risk and uncertainties. We use words such as "anticipate," "believe," "plan," "expect," "future," "intend," and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing and actual results may differ materially from historical results or our predictions of future results.

 

General Financial Matters

 

Our auditor’s report on our financial statements for the year ended December 31, 2023 contained a going concern qualification expressing substantial doubt about our ability to continue as a going concern.  Our liabilities significantly exceed our assets and we have yet to generate revenue from operations. Our primary creditor has claimed a default under the Promissory Note we issued to such creditor.  For us to continue to achieve our business plan we need to raise significant additional capital of which there can be no assurance. An investment in the Company would create a significant risk of loss to an investor.

 

Overview

 

Spirits Time International, Inc. (the “Company”) was incorporated on October 18, 2005 under the laws of the State of Nevada.  The Company was formed under the name of Sears Oil and Gas Corporation but effective October 22, 2018, our name was changed to Spirits Time International, Inc. to reflect our new business direction.

 

At the time the Company was organized, its principal business objective was to engage in the oil and gas business. The Company became a public reporting company by filing a Form S-1 Registration Statement with the SEC that was declared effective July 25, 2008.  The Company’s business operations in the oil and gas business were not successful and its initial principals sold controlling interest in the Company.   Prior to the Asset Acquisition (as defined below), we were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended).  As a result of the Asset Acquisition, we ceased to be a “shell company” and intend to commence operations in the beverage industry (initially in the tequila beverage industry).  

 

We have limited operating history, no revenue, and negative working capital.

 

On September 28, 2018, we completed and closed upon an Asset Acquisition Transaction (the “Acquisition”) and a Loan Transaction pursuant to which we intend to engage in the business of marketing tequila products under the brand name of Tequila Alebrijes.  We acquired the Tequila Alebrijes brand name, trademark and certain other assets from Human Brands International, Inc., a Nevada corporation (“Human Brands”).  

 

We intend to look for other beverage brand acquisition transactions in the future.

 

On April 14, 2023 the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with BioSculpture Technology, Inc. (“BioSculpture”) to, subject to a number of conditions, acquire 100% of the ownership of BioSculpture, as further described in the Company’s Form 8-K filed April 20, 2023. There will be many conditions to closing of the Merger Agreement, many of which are outside of the parties’ control, and we cannot predict whether these conditions will be satisfied. There are no assurances when or if closing of the merger as set out in the Merger Agreement will occur.

 

Plan of Operations

 

Prior to the Asset Acquisition transaction, we were a shell company with no substantive operations. The purpose of the Company was to seek and investigate potential assets, properties or businesses to acquire while complying with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

 

We have developed a business plan to obtain rights to develop a portfolio of beverage (alcoholic and non-alcoholic) product brands and to distribute and market beverage products nationally and internationally. Our first brand is the “Tequila Alebrijes” brand of tequila.  We obtained the trademark for this brand and the rights to market and distribute Tequila Alebrijes products. Currently, the “Tequila Alebrijes” brand of tequila is our only product brand.

 

We do not intend to produce beverage products but rather we intend to acquire brand and marketing rights for beverage products and thereafter commercialize our products either directly by selling to retailers and point of sale locations or through brand management agreements and/or distribution agreements with other companies involved in the beverage distribution business.


4


Acquisition of Assets

 

On September 13, 2018, we entered into an Asset Purchase Agreement to purchase inventory and intangible assets from Human Brands, as described above.  As of the periods presented and date of this filing, we have no additional assets, other than a nominal amount of cash.

 

The Company’s Business Plan - General

 

Our current business plan is to engage in the business of acquiring rights to market non-alcoholic and alcoholic beverage brands. As described above, our first acquisition was the Tequila Alebrijes brand of tequila. Currently, that is our only product brand.

 

Demand for premium distilled spirits brands is driving growth and transforming the distilled spirits industry, driven by several key trends including an increasingly global market for alcoholic beverages, better and more well-defined channels of distribution, an international and domestic rise of cocktail culture, the growing popularity for distilled spirits, a greater desire among consumers wanting to know more about the history and production methods behind what they drink, an increase in the willingness of consumers to enjoy experimenting and trying new brands, categories and styles of alcoholic beverages, the identifiable industry trend showing increasing demand for a broader variety and new brands at the point of sale, and a higher level of appreciation of quality over quantity, with premium and above offerings gaining market share.

 

Amidst the background where industry leading producers are shifting more emphasis on premium brand offerings, an emerging wave of small craft distillers is capturing an increasing market share. As the craft boom continues, we anticipate that larger brands will increase their emphasis on craft qualities and will look to emerging brands gaining consumer support as acquisition candidates.

 

We intend, subject to adequate financing, to build a portfolio of beverage brands of non-alcoholic and alcoholic beverages. We anticipate that we may be able to use our securities to acquire interests in additional beverage brands and as incentive for brand managers and other product distributors.  

 

Ultimate Business Goal

 

One of our ultimate business goals is to develop critical mass and a diverse portfolio of distilled spirits and non-alcoholic brands to make us an attractive acquisition target or an attractive partner for other companies in the beverage industry.

 

To achieve this goal, we plan on developing diverse channels of distribution by building relationships with strong regional and local distributors.  To support our distributors, we plan to work with brand managers to create marketing, support consumer awareness, and to develop demand at the retail level in liquor stores and bars.

 

Our planned operating strategy

 

Our business strategy relates to our Tequila Alebrijes product and potentially other distilled spirits brands and non-alcoholic brands. We have developed a strategy to commence and build operations in the premium spirits industry.  Our strategy is as follows:

 

(1)Building Our Branded Product Portfolio.  We plan to build a portfolio of distilled spirit and non-alcoholic brands through distribution agreements, acquisitions of distributors and brands, and potentially the development of our own proprietary brands.  We intend to attempt to add products in high-demand and in high-growth categories.   Our first brand acquisition, as described throughout this Form 10-Q, is the acquisition of the Tequila Alebrijes brand. 

 

(2)Qualify for Our Own Licenses and Permits. Initially we are relying on brand management agreements with companies that already have distribution channels and have import and export licenses and permits. In addition, we will be contracting with US domestic distributors that have permits and licenses in a large number of key states for spirits sales. In addition, our brand management companies will have the logistical capability to store, ship and comply with all state and federal regulations and accounting requirements.  The brand managers will also be responsible for collecting and reporting on all taxes, customs compliance and shipping regulations.  

 

(3)Build Distribution.   If, in the future, we obtain required permits, we intend to focus on building additional distribution for Tequila Alebrijes and other brands in the U.S. and Asia, the largest beverage market and the fastest growing beverage market, respectively.  

 

(4)Marketing.  We plan to bring the enjoyment of the Tequila Alebrijes experience to the customer. Key to scaling our business activities is our commitment to, and investment in innovative and effective sales and marketing campaigns, and supporting demand generated from those campaigns with sufficient inventory. Consumers want an experience and our marketing strategy is built around that. 


5


 

We anticipate that in order to achieve our marketing strategy for our Tequila Alebrijes brand and acquire and market other brands, we will be required to obtain significant capital from equity and debt sources. There can be no assurance that we will be able to obtain adequate additional capital as we need it or even if it is available, that it will be on terms and conditions that are acceptable and commercially reasonable.  We anticipate that we will issue shares of our capital stock to raise additional capital, to attract third party distribution networks, attempt to acquire interests in other brands and for employee compensation.

 

Results of Operations

 

We have yet to generate any revenue from the acquisition of the tequila related assets and there can be no assurance we will be able to generate meaningful revenues in the near future.  We anticipate that we must raise additional capital to develop a meaningful marketing program for our products and there can be no assurance that we will be able to raise adequate capital to market our products and develop active business operations.

 

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

 

For the three months ended March 31, 2024 and 2023, the Company had no revenue.  For the three months ended March 31, 2024, the Company incurred $17,082 of professional fees compared to $18,526 for the three months ended March 31, 2023.  Such expenses consist primarily of legal and accounting fees, as well as annual fees required to maintain the Company’s corporate status.  For the three months ended March 31, 2024, the Company incurred $2,322 of selling, general and administrative expenses compared to $2,079 for the three months ended March 31, 2023.  For the three months ended March 31, 2024, the Company incurred $31,584 of interest expense on notes payable compared to $29,546 for the three months ended March 31, 2023.      

 

As a result of the foregoing, the Company incurred a loss of $50,988 and $50,151, respectively, for the three months ended March 31, 2024 and 2023.    

 

Liquidity

 

As of March 31, 2024, the Company had $1,994 of cash and negative working capital of $1,485,549.  This compares with cash of $493 and negative working capital of $1,434,561 as of December 31, 2023.

 

For the three months ended March 31, 2024, the Company used cash of $31,024 in operations consisting of the loss of $50,998, a decrease in accounts payable – related party of $8,500, and a decrease in accrued interest due to related parties of $4,102 which was offset by changes in accounts payable and accrued interest of $32,566.  This compares with $6,909 used in operations for the three months ended March 31, 2023 consisting of the loss of $50,151 which was offset by changes in accounts payable and accrued interest of $33,063, changes in accounts payable – related party of $1,500, and changes in accrued interest due to related parties of $8,679.

 

There were no investing activities during the three months ended March 31, 2024 and 2023.    

 

For the three months ended March 31, 2024, financing activities provided $32,525 which consisted of proceeds from loans payable to related parties of $7,525 and proceeds from notes payable of $25,000.  For the three months ended March 31, 2023, financing activities provided $6,900 which consisted of proceeds from loans payable to related parties.

 

As a result of the foregoing, there was an increase in cash of $1,501 for the three months ended March 31, 2024 from the cash on hand as of December 31, 2023.  

 

From the date of inception (October 18, 2005) to March 31, 2024, the Company has accumulated a deficit of $2,479,856, most of which were expenses relating to the initial development of the Company and maintaining reporting company status with the SEC.  In order to survive as a going concern, the Company will require additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business. Failure to secure additional financing would result in business failure and a complete loss of any investment made into the Company.

 

Our ability to continue as a going concern in the next 12 months depends on our ability to obtain sources of capital to fund our continuing operations and to fund our operations in the beverage industry. As of March 31, 2024, our remaining cash balance is not sufficient to cover our current liabilities, obligations and working capital needs for the balance of 2024. We will continue to rely on loans from management and/or affiliated shareholders or we may raise additional capital through an interim financing to meet our general cash flow requirements until such time as we are able to complete the acquisition of an operating company.  


6


As described in Part II Item 3, the lender under the Secured Promissory Note has notified us of a claimed default under the Note. The Note is secured by all of the assets of the Company.  We currently do not have cash available to repay the Note and there is no assurance that we will ever have liquid assets necessary to repay the Note.

 

Employees

 

As of the date of this report, we have no employees. Subject to adequate financing and business needs we will retain employees, third party consultants, agents and other service providers on an as needed basis.

 

Off-Balance Sheet Arrangements

 

The Company did not have any off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

 

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. Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a Company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, the chief executive officer and chief financial officer concluded that the disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in the Company’s periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified.  The Company’s chief executive officer and chief financial officer also concluded that the disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.  

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

 

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; 


7


Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and 

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. 

 

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 or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

We carried out an assessment, under the supervision and with the participation of our management, including our CEO and Interim CFO, of the effectiveness of the design and operation of our internal controls over financial reporting, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of March 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013). Based on that assessment and on those criteria, our CEO and Interim CFO concluded that our internal control over financial reporting was not effective as of March 31, 2024. The principal basis for this conclusion is (i) failure to engage sufficient resources regarding our accounting and reporting obligations during our startup and (ii) failure to fully document our internal control policies and procedures.

 

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. The management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management’s report in this quarterly report.

 

The Company’s management, including the Company’s CEO and Interim CFO, does not expect that the Company’s internal control over financial reporting will prevent all errors and all fraud. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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 or compliance with the policies or procedures may deteriorate.

 

Changes in Internal Controls

 

There were no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.


8


 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is currently not a party to any pending legal proceedings.  As described in Part II, Item 3 of this Form 10-Q, we have been notified that Auctus Fund, LLC has claimed a default under the Promissory Note we issued to Auctus in September 2018.  Although we are attempting to resolve this issue with Auctus, there can be no assurance that Auctus will not commence a legal proceeding in connection with such claimed default.

 

No director, officer, or affiliate of the Company and no owner of record or beneficial owner of more than 5% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

 

Item 1A. Risk Factors

 

This item is not applicable to smaller reporting companies.  

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities

 

On September 24, 2018, the Company entered into a Securities Purchase Agreement (the "Auctus Securities Purchase Agreement") under which it issued a Senior Secured Convertible Promissory note in an aggregate principal amount of $300,000 (the "Auctus Note") to Auctus Fund, LLC ("Auctus"). The principal amount of the Auctus Note accrues interest at the rate of 10% per annum. The Auctus Note calls for default interest at the rate of 24% per annum. The maturity date of the Auctus Note was September 24, 2019.  The Auctus Note is secured by all of the assets of the Company.  Auctus has the option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the Auctus Note into shares of the Company's common stock at the Auctus Conversion Price.  The Auctus Conversion Price, subject to the adjustments described in the Auctus Note, shall equal the lesser of:

 

(i) 50% multiplied by the lowest Trading Price (as defined in the Auctus Note) (representing a discount rate of 50%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day (as defined in the Auctus Note) prior to the date of the Note, and 

 

(ii) the Variable Conversion Price (as defined in the Auctus Note herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).  The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (as defined in the Auctus Note) (representing a discount rate of 50%). 

 

The Note provides that the conversion price may be adjusted downward upon the occurrence of certain events or the failure of certain events to occur.

 

The Auctus Note contains provisions relating to events and actions that, if to occur or not occur, would result in an Event of Default under the Auctus Note.  One Event of Default is as follows:

 

The Company fails to (i) file a registration statement covering the  Auctus (or a successor holder’s) (“Holder”) resale of all of the shares underlying the Auctus Note (the “Registration Statement”) within ninety (90) days following the Issue Date (as defined in the Auctus Note), (ii) cause the Registration Statement to become effective within one hundred ninety (190) days following the Issue Date, (iii) cause the Registration Statement to remain effective until the Note is satisfied in full, (iv) comply with the Registration Rights Agreement between the Company and Holder entered into in connection with the issuance of this Note, or (v) immediately amend the Registration Statement or file a new Registration Statement (and cause such Registration Statement to become immediately effective) if there are no longer sufficient shares registered under the initial Registration Statement for the Holder’s resale of all of the shares underlying the Note.


9


 

Under the Auctus loan documents, the registration statement for the shares underlying the Auctus Note was required to be filed by the Company on or about December 23, 2018.  The Company did not file the required registration statement on that date.  Subsequent to December 23, 2018, the Company had communication with Auctus in connection with a potential agreed upon delay in the filing of the registration statement, but no written agreement relating to a waiver or forbearance was entered into by the Company and Auctus.

 

Notification of Default

 

On April 25, 2019, the Company received a demand letter from Auctus’s legal counsel that stated, among other things, that the Company has defaulted on the Auctus Note pursuant to: 

 

Sections 2.8 (Non-circumvention);  

 

3.1 (Failure to pay Principal or interest - acceleration);  

 

3.4 (Breach of Agreements and Covenants – Sections 2.8 of the Note – (Non-circumvention); and  

 

3.5 (Breach of Representations and Warranties – Section 3(g) (SEC Documents; Financial Statements) of that certain Securities Purchase Agreement (the “SPA”) by and between the Company and Auctus dated September 24, 2018; and 3.25 (Failure to Register) (this is not an exhaustive delineation of potential breaches).  

 

The demand letter further stated that as a result of such breaches and the default remedy provisions of the Note set forth therein at pages 20 and 21 thereof, as of April 25, 2019, the Company, owed Auctus at least $490,767 calculated as follows:  

 

Outstanding principal of $300,000 + accrued interest of $12,178 + $15,000 liquidated damages relating back to the Auctus Note issuance date for breach of Section 3.1 + 50% liquidated damages of $163,589 for default under Sections other than Section 3.2. 

 

Uncertainty of Outcome.   We have communicated with Auctus regarding the matters described in this Item 3 but are unable to predict whether we will be able to enter into a workable resolution with Auctus.  If not, Auctus could commence collection action against the Company and seek to foreclose on our assets and seek other remedies.

 

Item 4. Mine Safety Disclosures

None.

 

Item 5. Other Information

None.

 

Item 6. Exhibits

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits for this Form 10-Q, and are incorporated herein by this reference.


10


 

Signature

 

Pursuant to the requirements 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.

 

 

 

Date: May 20, 2024

Spirits Time International, Inc.

 

 

 

 

 

By: /s/ Mark A. Scharmann

 

 

Mark A. Scharmann, President, Chief Executive Officer,

 

 

Principal Financial and Accounting Officer

 

 

 

Exhibit No.

Description

 

 

 

 

31.1

Certification of the Principal Executive and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1

Certification of the Principal Executive and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101. INS

XBRL Instance Document

 

101. PRE

XBRL Taxonomy Extension Presentation Linkbase

 

101. LAB

XBRL Taxonomy Extension Label Linkbase

 

101. DEF

XBRL Taxonomy Extension Label Linkbase

 

101. CAL

XBRL Taxonomy Extension Label Linkbase

 

101. SCH

XBRL Taxonomy Extension Schema

*

Incorporated by reference from previous filings of the Company.

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.


11

Exhibit 31.1

CERTIFICATION

 

I, Mark A. Scharmann, certify that: 

 

     1. I have reviewed this quarterly report on Form 10-Q of Spirits Time International, Inc. (the registrant);

 

     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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) 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 caused 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. I have disclosed, based on our most recent evaluation of 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 function):

 

     (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 a significant role in the registrant's internal control over financial reporting.

 

Date:    May 20, 2024

 

By: /s/ Mark A. Scharmann                                              

 

 

Mark A. Scharmann, President, Chief Executive Officer,

 

 

Principal Executive and Accounting Officer

 

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Spirits Time International, Inc. (the Company) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission (the Report), I, Mark A. Scharmann, President, Chief Executive Officer and Chief Financial Officer of the Company, certify that, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002: 

       

(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 operations of the Company. 

 

 

Spirits Time International, Inc.

 

 

 

 

Date:  May 20, 2024

By /s/ Mark A. Scharmann

 

Mark A. Scharmann

 

President, Chief Executive Officer and

 

Chief Financial Officer

 

(Principal Executive and Financial Officer)

 

v3.24.1.1.u2
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2024
May 20, 2024
Details    
Registrant CIK 0001434737  
Fiscal Year End --12-31  
Registrant Name SPIRITS TIME INTERNATIONAL, INC.  
SEC Form 10-Q  
Period End date Mar. 31, 2024  
Tax Identification Number (TIN) 20-3455830  
Number of common stock shares outstanding   7,498,305
Filer Category Non-accelerated Filer  
Current with reporting Yes  
Interactive Data Current Yes  
Shell Company false  
Small Business true  
Emerging Growth Company false  
Document Quarterly Report true  
Document Transition Report false  
Securities Act File Number 333-151300  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 1661 Lakeview Circle  
Entity Address, City or Town Ogden  
Entity Address, State or Province UT  
Entity Address, Postal Zip Code 84403  
City Area Code 801  
Local Phone Number 399-3632  
Amendment Flag false  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q1  
v3.24.1.1.u2
Balance Sheets - USD ($)
Mar. 31, 2024
Dec. 31, 2023
CURRENT ASSETS    
Cash and cash equivalents $ 1,994 $ 493
Total Current Assets 1,994 493
OTHER ASSETS    
Intangible assets 0 0
TOTAL ASSETS 1,994 493
CURRENT LIABILITIES    
Accounts payable 218,655 207,775
Accounts payable - related party 1,000 9,500
Accrued interest 372,971 351,285
Accrued interest - related parties 160,717 164,819
Loans payable - related parties 279,200 271,675
Convertible notes payable - related parties 55,000 55,000
Convertible note payable 290,000 290,000
Notes payable 110,000 85,000
Total Current Liabilities 1,487,543 1,435,054
TOTAL LIABILITIES 1,487,543 1,435,054
COMMITMENTS AND CONTINGENCIES 0 0
STOCKHOLDERS' DEFICIT    
Common stock, $0.001 par value; 140,000,000 shares authorized, 7,498,305 shares issued and outstanding 7,498 7,498
Additional paid-in capital 986,354 986,354
Accumulated deficit (2,479,856) (2,428,868)
Total Stockholders' Deficit (1,485,549) (1,434,561)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 1,994 493
Series A Preferred Stock    
STOCKHOLDERS' DEFICIT    
Preferred Stock, Value, Issued 450 450
Total Stockholders' Deficit 450 450
Series D Preferred Stock    
STOCKHOLDERS' DEFICIT    
Preferred Stock, Value, Issued 5 5
Total Stockholders' Deficit $ 5 $ 5
v3.24.1.1.u2
Balance Sheets - Parenthetical - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 20,000,000 20,000,000
Common Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Common Stock, Shares Authorized 140,000,000 140,000,000
Common Stock, Shares, Issued 7,498,305 7,498,305
Common Stock, Shares, Outstanding 7,498,305 7,498,305
Series A Preferred Stock    
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 1,000,000 1,000,000
Preferred Stock, Shares Issued 450,000 450,000
Preferred Stock, Shares Outstanding 450,000 450,000
Series D Preferred Stock    
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 50,000 50,000
Preferred Stock, Shares Issued 5,000 5,000
Preferred Stock, Shares Outstanding 5,000 5,000
v3.24.1.1.u2
Statements of Operations - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Statements of Operations    
NET REVENUES $ 0 $ 0
OPERATING EXPENSES    
Professional fees 17,082 18,526
Selling, general and administrative 2,322 2,079
Total Operating Expenses 19,404 20,605
LOSS FROM OPERATIONS (19,404) (20,605)
OTHER INCOME (EXPENSES)    
Interest expense (31,584) (29,546)
Total Other Income (Expenses) (31,584) (29,546)
LOSS BEFORE INCOME TAXES (50,988) (50,151)
PROVISION FOR INCOME TAXES 0 0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest $ (50,988) $ (50,151)
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.01) $ (0.01)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED 7,498,305 7,361,005
v3.24.1.1.u2
Statements of Stockholders' Equity (Deficit) - USD ($)
Common Stock
Additional Paid-in Capital
Retained Earnings
Total
Series A Preferred Stock
Series D Preferred Stock
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2022 $ 7,361 $ 962,120 $ (1,956,350) $ (986,414) $ 450 $ 5
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 7,361,005       450,000 5,000
Net loss $ 0 0 (50,151) (50,151) $ 0 $ 0
Equity, Attributable to Parent, Ending Balance at Mar. 31, 2023 $ 7,361 962,120 (2,006,501) (1,036,565) $ 450 $ 5
Shares, Outstanding, Ending Balance at Mar. 31, 2023 7,361,005       450,000 5,000
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2023 $ 7,498 986,354 (2,428,868) (1,434,561) $ 450 $ 5
Shares, Outstanding, Beginning Balance at Dec. 31, 2023 7,498,305       450,000 5,000
Net loss $ 0 0 (50,988) (50,988) $ 0 $ 0
Equity, Attributable to Parent, Ending Balance at Mar. 31, 2024 $ 7,498 $ 986,354 $ (2,479,856) $ (1,485,549) $ 450 $ 5
Shares, Outstanding, Ending Balance at Mar. 31, 2024 7,498,305       450,000 5,000
v3.24.1.1.u2
Statements of Cash Flows - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (50,988) $ (50,151)
Changes in operating assets and liabilities    
Accounts payable and accrued interest 32,566 33,063
Accounts payable - related party (8,500) 1,500
Accrued interest - related parties (4,102) 8,679
Net Cash Used by Operating Activities (31,024) (6,909)
CASH FLOWS FROM INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from notes payable 25,000 0
Proceeds from loans payable - related parties 7,525 6,900
Net Cash Provided by Financing Activities 32,525 6,900
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,501 (9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 493 707
CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,994 698
SUPPLEMENTAL DISCLOSURES    
Cash paid for interest 14,000 0
Cash paid for income taxes $ 0 $ 0
v3.24.1.1.u2
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 1 - CONDENSED FINANCIAL STATEMENTS

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

 

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial statements at March 31, 2024 and for all periods presented have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed unaudited financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2023 audited financial statements.  The results of operations for the period ended March 31, 2024 are not necessarily indicative of the operating results for the full year.

 

Loss Per Share - The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. At March 31, 2024 the Company had no warrants outstanding, and convertible debt outstanding that is convertible into 5,521,621 shares of common stock. During the three months ended March 31, 2023, the Company had warrants outstanding that were exercisable into 264,084 shares of common stock, and convertible debt outstanding that was convertible into 2,800,040 shares of common stock.  The common stock issuable from the warrants and convertible debt was not included, as it would be anti-dilutive due to continuing losses.

 

Three Months Ended

Loss (Numerator)

Shares (Denominator)

Per Share Amount

March 31, 2024

$               (50,988)

7,498,305

$             (0.01)

March 31, 2023

$               (50,151)

7,361,005

$             (0.01)

v3.24.1.1.u2
NOTE 2 - INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 2 - INTANGIBLE ASSETS

NOTE 2 – INTANGIBLE ASSETS

 

Intangible assets consist of the Tequila Alebrijes brand name, trademark, and property rights. For the year ended December 31, 2023 we recorded an impairment loss of $275,000. As of March 31, 2024 and December 31, 2023, the Company had intangible assets of $0.

v3.24.1.1.u2
NOTE 3 - GOING CONCERN
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 3 - GOING CONCERN

NOTE 3 - GOING CONCERN

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has had no revenues and has generated losses from operations. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern.  The continuance of the Company as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.

 

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

v3.24.1.1.u2
NOTE 4 -RELATED PARTY LOANS AND OTHER TRANSACTIONS
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 4 -RELATED PARTY LOANS AND OTHER TRANSACTIONS

NOTE 4 – RELATED PARTY LOANS AND OTHER TRANSACTIONS

 

During the three months ended March 31, 2024 and 2023, the Company received loans in the amount of $7,525 and $6,900, respectively, from related parties of the Company.  These loans accrue interest at the rate of 12% per annum, are due on demand and are not convertible into common stock of the Company.  The balances due on non-convertible loans payable to related parties were principal of $279,200 and $271,675 plus accrued interest of $104,595 and $110,338 as of March 31, 2024 and December 31, 2023, respectively.  During the three months ended March 31, 2024 and 2023, interest in the amount of $14,000 and $0, respectively, was paid.

 

Beginning August 2017, the Company entered into an oral agreement to pay the Company’s sole director $500 per month as payment for use of his personal residence as the Company’s office and mailing address.  The Company has recorded rent expense of $1,500 during each of the three months ended March 31, 2024 and 2023 which is included in the selling, general and administrative expenses on the statements of operations. The amount payable at December 31, 2023 was $9,500. During the three months ended March 31, 2024 the Company paid $10,000, resulting in $1,000 payable at March 31, 2024.

 

In March 2014, the Company issued a $40,000 convertible promissory note to the sole officer and director of the Company and a $15,000 convertible promissory note to another affiliated shareholder (the “Convertible Notes”). On October 11, 2022 this unaffiliated individual was appointed as a director of the Company. The Convertible Notes had a term of one year expiring March 2015, are now payable on demand, and accrue interest at the rate of 12% per annum. The holders of the Convertible Notes, may, at their option, convert all or any portion of the outstanding principal balance of, and all accrued interest on the Convertible Notes into shares of the Company’s common stock, par value $0.001 per share, at a conversion rate of $1.00 per share.  During the year ended December 31, 2019, $10,000 of accrued interest was converted into 5,000 shares of Preferred Stock.  No principal has been paid on these Notes.  As of March 31, 2024 and December 31, 2023, the balance due to these related parties for these Notes was principal of $55,000 and accrued interest of $56,122 and $54,481, respectively.

 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

Convertible notes and loans payable – related parties consisted of the following:

 

 

March 31,

2024

 

December 31, 2023

Loans payable to related parties, interest at 12%  per annum, due on demand

 

$279,200  

 

$271,675  

Convertible notes payable to related parties, interest at 12% per annum, due on March 7, 2015 (in default), convertible into common stock at $1.00 per share

 

55,000  

 

55,000  

Total Convertible Notes and Loans Payable – Related Parties

 

334,200  

 

326,675  

Less: Current Portion

 

(334,200) 

 

(326,675) 

Long-Term Convertible Notes and Loans Payable – Related Parties

 

$ 

 

$ 

 

Accrued interest on the convertible notes and loans payable, related parties was $160,717 and $164,819 at March 31, 2024 and December 31, 2023, respectively.  The Company did not record beneficial conversion feature elements on the related party convertible debt due to the conversion rate of $1.00 per share being greater than the fair market value of the underlying shares on the date of issuance.

 

v3.24.1.1.u2
NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

 

The Company has a collateralized convertible debt obligation with an unaffiliated entity outstanding at March 31, 2024 and December 31, 2023 as follows:

 

Note (A)

 

Principal(1)

 

Less Debt Discount

 

Plus Premium

 

Net Note Balance

 

Accrued Interest

 

 

 

 

 

 

 

 

 

 

 

March 31, 2024

 

$         290,000

 

$                    -

 

$                 -

 

$         290,000

 

$        338,970

December 31, 2023

 

$         290,000

 

$                    -

 

$                 -

 

$         290,000

 

$        319,918

 

(1)Collateralized by the Company’s assets, including accounts receivable, cash and equivalents, inventory, property, equipment, intangibles.  At March 31, 2024 and December 31, 2023, the Company’s assets consisted of cash and equivalents of $1,994 and $493, respectively, for total carrying value of $1,994 and $493, respectively. 

 

(A)On September 24, 2018 (the “Date of Issuance”) the Company issued a convertible promissory note (the “Note”) with a face value of $300,000, maturing on September 24, 2019, and a stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company's common stock, based on a conversion rate of 50% of the lowest trading price for the 25 days prior to conversion. This note is currently in default (Note 7). 

 

SPIRITS TIME INTERNATIONAL, INC.

Notes to the Condensed Financial Statements

March 31, 2024

(Unaudited)

 

 

 

Along with the Note, on the Date of Issuance the Company issued 42,857 Common Stock Purchase Warrants (the “Warrants”), exercisable immediately at a fixed exercise price of $3.50 with an expiration date of September 24, 2023.  The note proceeds of $300,000 were allocated between the fair value of the promissory note ($300,000) and the Warrants ($86,750), resulting in a debt discount of $67,292.  As the warrants were exercisable immediately, this debt discount was amortized in its entirety to interest expense on the Date of Issuance. The Warrants expired September 24, 2023.

 

v3.24.1.1.u2
NOTE 6 - NOTES PAYABLE
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 6 - NOTES PAYABLE

NOTE 6 – NOTES PAYABLE

 

Notes payable consisted of the following:

 

 

March 31,

2024

 

December 31, 2023

 

 

 

 

 

Note payable to an unrelated individual, interest at 12% per annum, issued August 1, 2018 due November 15, 2018 (in default), unsecured

 

$10,000  

 

$10,000  

Note payable to an unrelated individual, interest at 12% per annum, issued December 31, 2018 due December 31, 2019 (in default), unsecured

 

30,000  

 

30,000  

Note payable to an unrelated individual, interest at 12% per annum, issued May 1, 2020 due May 1, 2021 (in default), unsecured

 

5,000  

 

5,000  

Note payable to an unrelated individual, interest at 10% per annum, issued January 20, 2021 due January 20, 2022 (in default), unsecured

 

10,000  

 

10,000  

Note payable to an unrelated individual, interest at 8% per annum, issued March 18, 2022 due March 18, 2023 (in default), unsecured

 

10,000  

 

10,000  

Note payable to an unrelated entity, interest at 8% per annum, issued April 20, 2022 due April 20, 2023 (in default), unsecured

 

10,000  

 

10,000  

Note payable to an unrelated entity, interest at 10% per annum, issued April 18, 2023 due April 18, 2024, unsecured

 

8,000  

 

8,000  

Note payable to an unrelated entity, interest at 10% per annum, issued September 11, 2023 due September 11, 2024, unsecured

 

2,000  

 

2,000  

Note payable to an unrelated entity, interest at 10% per annum, issued February 2, 2024 due February 2, 2025, unsecured

 

25,000  

 

 

 

 

 

 

 

Total Notes Payable

 

110,000  

 

85,000  

Less: Current Portion

 

(110,000) 

 

(85,000) 

Long-Term Notes Payable

 

$ 

 

$ 

 

Accrued interest and interest expense for these Notes as of and for the three months ended March 31, 2024 totaled $34,001 and $2,634, respectively.  Accrued interest and interest expense for these Notes as of and for the year ended December 31, 2023 totaled $31,367 and $8,624, respectively.

v3.24.1.1.u2
NOTE 7 - COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 7 - COMMITMENTS AND CONTINGENCIES

NOTE 7 – COMMITMENTS AND CONTINGENCIES

 

Promissory Note Default

 

On April 25, 2019, the Company received a demand letter from the legal counsel representing the third-party investor holding Note (A) from Note 5 that stated, among other things, that the Company has defaulted on Note (A).  The demand letter further stated that as a result of such breaches and the default remedy provisions of Note (A) set forth therein, as of April 25, 2019, the Company, owed the noteholder at least $490,767, comprised of outstanding principal of $300,000, accrued interest of $12,178, and liquidated damages of $178,589.

 

We have communicated with the noteholder regarding these matters and are under advisement from our legal counsel that, although we have defaulted on Note (A) and as such are accruing the default interest of 24% as stated within Note (A), we are not otherwise in breach of Note (A).  We are unable to predict whether we will be able to enter into a workable resolution with the noteholder.  If not, the noteholder could commence collection action against the Company and seek to foreclose on our assets and seek other remedies.  We and our legal counsel believe the likelihood of this action is remote, and therefore have not accrued for any potential damages at March 31, 2024 and December 31, 2023.

v3.24.1.1.u2
NOTE 8 - EQUITY TRANSACTIONS
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 8 - EQUITY TRANSACTIONS

NOTE 8 – EQUITY TRANSACTIONS

 

Common Stock

 

The Company has authorized 140,000,000 shares of common stock with a par value of $0.001.  There were no common stock transactions during the three months ended March 31, 2024 or 2023, resulting in 7,498,305 common shares issued and outstanding at March 31, 2024 and December 31, 2023.

 

Preferred Stock

 

The Company has authorized 20,000,000 shares of Preferred Stock. On May 20, 2022, the Company designated 1,000,000 shares of Series A Preferred Stock (“Series A”) with par value of $0.001. Each share of Series A participates in liquidation equal to common stock, is convertible into common stock at the option of the holder on a ten-for-one basis and carries no common votes unless and until converted to common stock at which time the converted shares are entitled to vote on any matter submitted to common stockholders. The Series A shares are not entitled to dividends unless and until converted to common stock at which time they would have dividend rights as common stock holders. The Company had 450,000 shares of Series A Preferred issued and outstanding at March 31, 2024 and December 31, 2023.

 

The Company has also designated 50,000 shares as Series D Preferred Stock (“Series D”) with par value of $0.001. Each share of Series D participates in dividends and liquidation equal to common stock, is convertible into common stock at the option of the holder on a one-for-one basis and carries 10,000 common votes on any matter submitted to common stockholder vote. The Company had 5,000 shares of Series D issued and outstanding at March 31, 2024 and December 31, 2023.

v3.24.1.1.u2
NOTE 9 - SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2024
Notes  
NOTE 9 - SUBSEQUENT EVENTS

NOTE 9 – SUBSEQUENT EVENTS

 

On April 16, 2024, the parties completed execution of an amendment to Note (A) from Note 5 and Note 7 as further described in the Company’s Form 8-K filed April 22, 2024.

 

On April 17, 2024, the Company issued 200,000 shares of Preferred Series A stock to unaffiliated individuals for review of potential business opportunities.

v3.24.1.1.u2
NOTE 1 - CONDENSED FINANCIAL STATEMENTS: Earnings Per Share, Policy (Policies)
3 Months Ended
Mar. 31, 2024
Policies  
Earnings Per Share, Policy

Loss Per Share - The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. At March 31, 2024 the Company had no warrants outstanding, and convertible debt outstanding that is convertible into 5,521,621 shares of common stock. During the three months ended March 31, 2023, the Company had warrants outstanding that were exercisable into 264,084 shares of common stock, and convertible debt outstanding that was convertible into 2,800,040 shares of common stock.  The common stock issuable from the warrants and convertible debt was not included, as it would be anti-dilutive due to continuing losses.

 

Three Months Ended

Loss (Numerator)

Shares (Denominator)

Per Share Amount

March 31, 2024

$               (50,988)

7,498,305

$             (0.01)

March 31, 2023

$               (50,151)

7,361,005

$             (0.01)

v3.24.1.1.u2
NOTE 1 - CONDENSED FINANCIAL STATEMENTS: Earnings Per Share, Policy: Schedule of EPS (Tables)
3 Months Ended
Mar. 31, 2024
Tables/Schedules  
Schedule of EPS

 

Three Months Ended

Loss (Numerator)

Shares (Denominator)

Per Share Amount

March 31, 2024

$               (50,988)

7,498,305

$             (0.01)

March 31, 2023

$               (50,151)

7,361,005

$             (0.01)

v3.24.1.1.u2
NOTE 4 -RELATED PARTY LOANS AND OTHER TRANSACTIONS: Schedule of convertable debt (Tables)
3 Months Ended
Mar. 31, 2024
Tables/Schedules  
Schedule of convertable debt

 

 

March 31,

2024

 

December 31, 2023

Loans payable to related parties, interest at 12%  per annum, due on demand

 

$279,200  

 

$271,675  

Convertible notes payable to related parties, interest at 12% per annum, due on March 7, 2015 (in default), convertible into common stock at $1.00 per share

 

55,000  

 

55,000  

Total Convertible Notes and Loans Payable – Related Parties

 

334,200  

 

326,675  

Less: Current Portion

 

(334,200) 

 

(326,675) 

Long-Term Convertible Notes and Loans Payable – Related Parties

 

$ 

 

$ 

v3.24.1.1.u2
NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES: Schedule of promissory notes (Tables)
3 Months Ended
Mar. 31, 2024
Tables/Schedules  
Schedule of promissory notes

The Company has a collateralized convertible debt obligation with an unaffiliated entity outstanding at March 31, 2024 and December 31, 2023 as follows:

 

Note (A)

 

Principal(1)

 

Less Debt Discount

 

Plus Premium

 

Net Note Balance

 

Accrued Interest

 

 

 

 

 

 

 

 

 

 

 

March 31, 2024

 

$         290,000

 

$                    -

 

$                 -

 

$         290,000

 

$        338,970

December 31, 2023

 

$         290,000

 

$                    -

 

$                 -

 

$         290,000

 

$        319,918

v3.24.1.1.u2
NOTE 1 - CONDENSED FINANCIAL STATEMENTS: Earnings Per Share, Policy (Details)
3 Months Ended
Mar. 31, 2024
shares
Details  
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 264,084
Conversion of Stock, Shares Converted 2,800,040
v3.24.1.1.u2
NOTE 1 - CONDENSED FINANCIAL STATEMENTS: Earnings Per Share, Policy: Schedule of EPS (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Details    
Net loss $ (50,988) $ (50,151)
Weighted Average Number of Shares Issued, Basic 7,498,305 7,361,005
Earnings Per Share, Basic $ (0.01) $ (0.01)
v3.24.1.1.u2
NOTE 2 - INTANGIBLE ASSETS (Details)
Dec. 31, 2023
USD ($)
Details  
Inventory, Net $ 275,000
v3.24.1.1.u2
NOTE 4 -RELATED PARTY LOANS AND OTHER TRANSACTIONS (Details) - USD ($)
3 Months Ended
Apr. 30, 2014
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Proceeds from loans payable - related parties   $ 7,525 $ 6,900  
Loans payable - related parties   279,200   $ 271,675
Interest Paid, Including Capitalized Interest, Operating and Investing Activities   14,000 0  
Accounts Payable, Related Parties, Current   1,000   9,500
Accrued interest - related parties   160,717   164,819
Principle        
Loans payable - related parties   279,200   271,675
Interest        
Loans payable - related parties   104,595   110,338
Due from Related Parties, Current   56,122   54,481
Note 2        
Debt Instrument, Face Amount $ 40,000      
Debt Instrument, Payment Terms Notes had a term of one year expiring March 2015, are now payable on demand, and accrue interest at the rate of 12% per annum      
Debt Conversion, Original Debt, Amount   $ 10,000    
Debt Conversion, Converted Instrument, Shares Issued   5,000    
Due from Related Parties, Current       55,000
Note 3        
Debt Instrument, Face Amount $ 15,000      
Related Parties        
Debt Instrument, Interest Rate Terms   These loans accrue interest at the rate of 12% per annum, are due on demand and are not convertible into common stock of the Company    
Loans payable - related parties   $ 279,200   271,675
Accrued interest - related parties   160,717   $ 164,819
Director 1        
Operating Leases, Future Minimum Payments Due   500    
Operating Lease, Expense   $ 1,500 $ 1,500  
v3.24.1.1.u2
NOTE 4 -RELATED PARTY LOANS AND OTHER TRANSACTIONS: Schedule of convertable debt (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Loans payable to related parties, interest at 12% per annum, due on demand $ 279,200 $ 271,675
Convertible notes payable to related parties, interest at 12% per annum, due on March 7, 2015 (in default), convertible into common stock at $1.00 per share 55,000 55,000
Related Parties    
Loans payable to related parties, interest at 12% per annum, due on demand 279,200 271,675
Convertible notes payable to related parties, interest at 12% per annum, due on March 7, 2015 (in default), convertible into common stock at $1.00 per share 55,000 55,000
Total Convertible Notes and Loans Payable - Related Parties 334,200 326,675
Related Parties | Current    
Less: Current Portion (334,200) (326,675)
Related Parties | Noncurrent    
Long-Term Convertible Notes and Loans Payable - Related Parties $ 0 $ 0
v3.24.1.1.u2
NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES: Schedule of promissory notes (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Accrued interest $ 372,971 $ 351,285
Promissory Note    
Debt Instrument, Face Amount 290,000 290,000
Debt Instrument, Unamortized Discount 0 0
Debt Instrument, Unamortized Premium 0 0
Long-Term Debt, Gross 290,000 290,000
Accrued interest $ 338,970 $ 319,918
v3.24.1.1.u2
NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES (Details) - USD ($)
3 Months Ended
Sep. 24, 2018
Mar. 31, 2024
Dec. 31, 2023
Cash and cash equivalents   $ 1,994 $ 493
TOTAL ASSETS   $ 1,994 $ 493
Warrant      
Extended Product Warranty Description   exercisable immediately at a fixed exercise price of $3.50 with an expiration date of September 24, 2023  
Amortization of Debt Discount (Premium)   $ 67,292  
Note 1      
Debt Instrument, Face Amount $ 300,000    
Debt Instrument, Payment Terms maturing on September 24, 2019, and a stated interest of 10% to a third-party investor    
v3.24.1.1.u2
NOTE 6 - NOTES PAYABLE (Details) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Total Notes Payable $ 110,000   $ 85,000
Less: Current Portion (110,000)   (85,000)
Long-Term Notes Payable 0   0
Series 1      
Notes Payable 10,000   10,000
Series 2      
Notes Payable 30,000   30,000
Series 3      
Notes Payable 5,000   5,000
Series 4      
Notes Payable 10,000   10,000
Series 5      
Notes Payable 10,000   10,000
Series 6      
Notes Payable 10,000   10,000
Series 7      
Notes Payable 8,000   8,000
Series 8      
Notes Payable 2,000   2,000
Series 9      
Notes Payable 25,000   0
Series      
Interest Payable, Current 34,001   $ 31,367
Interest Expense, Debt $ 2,634 $ 8,624  
v3.24.1.1.u2
NOTE 7 - COMMITMENTS AND CONTINGENCIES (Details) - Auctus
Apr. 25, 2019
USD ($)
Long-Term Debt, Gross $ 490,767
Principle  
Long-Term Debt, Gross 300,000
Interest | Series 1  
Long-Term Debt, Gross 12,178
Interest | Series 2  
Debt Related Commitment Fees and Debt Issuance Costs $ 178,589
v3.24.1.1.u2
NOTE 8 - EQUITY TRANSACTIONS (Details) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Common Stock, Shares Authorized 140,000,000 140,000,000
Common Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Common Stock, Shares, Outstanding 7,498,305 7,498,305
Common Stock, Shares, Issued 7,498,305 7,498,305
Preferred Stock, Shares Authorized 20,000,000 20,000,000
Series A Preferred Stock    
Preferred Stock, Shares Authorized 1,000,000 1,000,000
Preferred Stock, Shares Issued 450,000 450,000
Preferred Stock, Shares Outstanding 450,000 450,000
Series D Preferred Stock    
Preferred Stock, Shares Authorized 50,000 50,000
Preferred Stock, Shares Issued 5,000 5,000
Preferred Stock, Shares Outstanding 5,000 5,000

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