**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-K/A**

(Mark One)

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended **December 31, 2014**

 

OR

 

 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 Commission File Number **000-54509**

 

| **LONE STAR GOLD, INC.**                         |
|--------------------------------------------------|
| *(Name of Small Business Issuer in its charter)* |

 

| **Nevada**                 |   | **45-2578051**                      |
|----------------------------|--------|-------------------------------------|
| *(State of incorporation)* |   | *(IRS Employer Identification No.)* |

 

| **20311 Chartwell Center Drive, Ste. 1469**

**Cornelius, NC 28031** |   | **28031**    |
|----------------------------------------------------------------------|--------|--------------|
| *(Address of principal executive office)*                            |   | *(Zip Code)* |

 

Registrant's telephone number, including area code: **1(800)947-9197**

 

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

 

Securities registered pursuant to Section 12(g) of the Act: **Common Stock**

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ̈ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ̈ No x

 

Indicate by check mark whether the registrant (1) has filed all reports 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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No  ̈

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

| Large accelerated filer |  ̈                  | Accelerated filer         |  ̈ |
|-------------------------|-------------------------|---------------------------|--------|
| Non-accelerated filer   | x                       | Smaller reporting company | x      |
|                    | Emerging growth company | x                         |

 

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

 

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

 

The aggregate market value of the voting stock held by non-affiliates of the Company on June 30, 2014, was approximately $1,430,000.

 

As of June 25, 2019, the Company had 1,502,470 outstanding shares of common stock.

 

Securities registered pursuant to Section 12(b) of the Act:

 

| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---------------------|-------------------|-------------------------------------------|
| None                | N/A               | N/A                                       |

 

Documents incorporated by reference: None

 

    

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which include but are not limited to, statements concerning our business strategy, plans and objectives, projected revenues, expenses, gross profit, income, and mix of revenue. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements do not guarantee future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements.

 

 2  

 

**Item 1. Business**

 

Throughout this Annual Report on Form 10-K Lone Star Gold, Inc. is referred to as “we,” “our,” “us,” the “Company,” or “Lone Star.”

 

The Company was formed as a Nevada corporation on November 26, 2007 as Keyser Resources, Inc. On June 14, 2011, the Company changed its name to Lone Star Gold, Inc. The Company was involved in exploration and development of mining properties until September 30, 2013 when it discontinued its mining operations. As of December 31, 2013, all the Company’s projects regarding La Candelaria and Chihuahua, Mexico (the Tailings Project) were abandoned and all contracts incident to those projects expired and or were terminated.

 

In June of 2017 the Company’s creditors filed a petition in the District Court of Harris County, Texas for the appointment of a receiver. In August of 2017, Angela Collette was appointed receiver pursuant to the petition. In connection with the receivership, Ms. Collette was appointed President, Secretary, Treasurer and Director of the Company. In February 2018 Ms. Collette appointed William Alessi as a director of the Company and then resigned as a director and officer of the Company.

 

In February 2018 William Alessi, our sole director and Executive Officer, was issued 100,000 shares of common stock and 30,000,000 shares of our series A preferred share. Each Series A preferred share is entitled to 100 votes on any matter upon which the holder of common stock is entitled to vote.

 

In February 2019 Mr. Alessi, , returned 12,000,000 shares of the Company’s Series A preferred stock to the Company for cancellation.

 

On February 6, 2019, the Company signed an agreement with S. Mark Spoone. The Company issued Spoone 12,000,000 shares of the Company’s Series A Preferred stock in consideration for the acquisition of Spoone’s trademarks and intellectual property which includes all rights and trade secrets to the hemp-derived CBD-infused line of consumer beverages. 

 

**Industry Background:**

 

Non-alcoholic beverages are among the most widely distributed food products in the world and are being sold through more than 400,000 retailers in the United States, our core market. The United States has more than 2,600 beverage companies and 500 bottlers of beverage products. Collectively they account for more than $100 billion in annual sales. It is estimated that globally more than $300 billion worth of non-alcoholic beverages are sold annually. The beverage market is controlled by two giants, The Coca-Cola Company (“Coke”) and PepsiCo, combining for over 70% of the non-alcoholic beverage market. The demand for “better-for you” and functional drinks are two of the fastest growing beverage categories. 

 

Since the signing of the 2018 Farm Bill, there has been a significant boost in CBD store fronts, both brick and mortar, and online retailers across the country. According to recent 3rd party reports, the hemp-derived CBD market is expected to reach sales of $22 billion by 2022, outpacing cannabis sales, and surging from $591 million in 2018.

 

**Mission and Growth Strategy:**

 

Our mission is to be one of the market leaders in the development and marketing of natural and functional hemp derived beverage products that provide real health benefits to a significant segment of the population and are convenient and appealing to consumers. We have an experienced management team of beverage industry, marketing and financial markets executives that have strong relationships in the industry. 

 

We plan to increase awareness of our brand in the United States by securing national chain, convenience and key account store listings for all our products and focusing on full service Class “A” distributors.

 

 3  

 

**Products:**

 

Good Hemp® 2oh! is a line-up of refreshing, all-natural, “good-for-you”, ready-to-drink waters in six flavors: blueberry-blast, island coco-lime, kiwi-strawberry, lemon-twist, mango-fandango and Q-cumbermint. Each Good Hemp® 2oh! beverage is 16.9 fluid ounces infused with 10mg of hemp oil (CBD rich), 6g of prebiotic fiber, has 0 sugar, contain no artificial sweeteners or artificial flavors, are gluten free, vegan, and contain 0 net carbs.

 

Good Hemp® fizz is a line-up of carbonated refreshing, all-natural, “good-for-you”, “ready-to-drink carbonated beverages in 3 flavors: blueberry-bam, mango-tango and citrus-twist. Each Good Hemp® fizz beverage is 12 fluid ounces infused with 10mg of hemp oil (CBD rich), 6g of prebiotic fiber, contain no artificial sweeteners or artificial flavors, are gluten free and vegan.

 

Good Hemp® products have been sold throughout the United States since 2016 via Amazon.com, as well as local retailers.

 

See www.goodhemplivin.com for more information concerning the Good Hemp line of products.

 

The fact that Good Hemp® beverages contain no artificial flavors, colors, sweeteners or preservatives are gluten free and vegan gives them a unique profile that qualifies them for sale in various channels such as health food stores 

 

**Distribution Systems:**

 

Our distribution strategy will be comprised of traditional beverage distribution through established channels.

 

Direct Store Delivery (“DSD”) - DSD players, and regional and local distributors touch over 90% of retail chains in the US. DSDs primarily distribute beverages, chips, snacks and milk and provide pre-sales, delivery and merchandising services to their customers. Service levels are daily and weekly and they require 25% to 30% gross profit from sales to their customers. We will grant these independent distributors the exclusive right in defined territories to distribute finished cases of one or more of our products through written agreements. These agreements typically include compensation to those distributors in the event we provide product directly to one of our regional retailers located in the distributor’s region. We will choose our distributors based on their perceived ability to build our brand franchise in convenience stores and grocery stores.

 

Direct to Retail Channel (“Warehouse Direct”) - We are targeting listings with large retail convenience store and grocery store chains where we ship direct to the chain stores warehousing system. Retailers must have warehousing and delivery capabilities. Services to retailers will be provided by an assigned broker, approved by us, to oversee pre-sale and merchandising services. Our direct to retail channel of distribution is an important part of our strategy to target large national or regional restaurant chains, retail accounts, including mass merchandisers and premier food-service businesses. Through these programs, we will negotiate directly with the retailer to carry our products, and the account is serviced through the retailer’s appointed distribution system. These arrangements are terminable at any time by these retailers or us and will contain no minimum purchase commitments.

 

**Production Facilities:**

 

Our strategy is to outsource the manufacturing and warehousing of our products to independent contract manufacturers (“co-packers”). We will purchase our raw materials from North American suppliers which deliver to our third-party co-packers. We will use two or more co-packers to manufacture and package our products. Once our products are manufactured, we store finished product in a warehouse adjacent to each co-packer or in third party warehouses. Our copackers will be chosen based on their proximity to markets covered by our distributors. Most of the ingredients used in the formulation of our products are off-the shelf and thus readily available. No ingredient has a lead time greater than two weeks. Other than minimum case volume requirements per production run for most co-packers, we will not have annual minimum production commitments with our co-packers. Our co-packers may terminate their arrangements with us at any time, in which case we could experience disruptions in our ability to deliver products to our customers. We will continually review our contract packing needs considering regulatory compliance and logistical requirements and may add or change co-packers based on those needs.

 

 4  

 

**Raw Materials:**

 

Substantially all the raw materials used in the preparation, bottling and packaging of our products will be purchased by us or by our contract manufacturers in accordance with our specifications. The raw materials used in the preparation and packaging of our products will consist primarily of juice concentrates, natural flavors, stevia, pure cane sugar, bottles, labels, trays and enclosures. These raw materials will be purchased from suppliers selected by us or by our contract manufacturers. We believe that we have adequate sources of raw materials, which are available from multiple suppliers.

 

We will purchase our flavor concentrate from several flavor concentrate suppliers. Generally, all natural flavor suppliers own the proprietary rights to the flavors. Independent suppliers bear a large portion of the expense for the development of new products and flavors, thereby enabling us to develop new products and flavors at relatively low cost. 

 

**New Product Development:**

 

Our product philosophy will continue to be based on developing products in those segments of the market that offer the greatest chance of success such as health, wellness and natural refreshment and rehydration, and we will continue to seek out underserved market niches. We believe we can quickly respond, , to changing market conditions with new and innovative products. We are committed to developing products that are distinct, meet a quantifiable need, are proprietary, lend themselves to at least a 30% gross profit, project a quality and healthy image, and can be distributed through existing distribution channels. We are identifying brands of other companies with a view to acquiring them or taking on the exclusive distribution of their products.

 

**Intellectual Property:**

 

We own the following intellectual property: - Good Hemp® trademark, Good Hemp 2oh! And Good Hemp fizz! beverage formulations.

 

**Seasonality:**

 

Our sales are expected to be seasonal and experience fluctuations in quarterly results because of many factors. Historically, the industry experiences an increase in revenues during the warm weather months of April through September. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. Thus, we believe that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the entire fiscal year.

 

**Emerging Growth Company Status:**

 

We are an “emerging growth company” as defined under the Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act. We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

 5  

 

As an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to:

 

|   | · | not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act (we also will not be subject to the auditor attestation requirements of Section 404(b) as long as we are a “smaller reporting company,” which includes issuers that had a public float of less than $75 million as of the last business day of their most recently completed second fiscal quarter); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |        |                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and                                                                                                                                                                                                                                                                                                                   |
|        |        |                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.                                                                                                                                                                                                                                                 |

 

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Under this provision, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. In other words, an “emerging growth company” can delay the adoption of such accounting standards until those standards would otherwise apply to private companies until the first to occur of the date the subject company (i) is no longer an “emerging growth company” or (ii) affirmatively and irrevocably opts out of the extended transition period provided in Securities Act Section 7(a) (2) (B). The Company has elected to take advantage of this extended transition period and, as a result, our financial statements may not be comparable to the financial statements of other public companies. Accordingly, until the date that we are no longer an “emerging growth company” or affirmatively and irrevocably opt out of the exemption provided by Securities Act Section 7(a) (2) (B), upon the issuance of a new or revised accounting standard that applies to your financial statements and has a different effective date for public and private companies, clarify that we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.

 

**Other Information**

 

As of June 30, 2019, the Company had one employee.

 

The Company’s office is located at 20311 Chartwell Center Drive, Ste. 1469, Cornelius, NC 28031.

 

**Item 1A. Risk Factors.**

 

Not applicable.

 

**Item 1B. Unresolved Staff Comments.**

 

Not applicable.

 

**Item 2. Properties.**

 

See Item 1.

 

**Item 3. Legal Proceedings.**

 

None.

 

**Item 4. Mine Safety Disclosures**

 

None.

 

 6  

 

**Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.**

 

Since June 20, 2011, shares of the Company’s common stock have been quoted on the Over-the-Counter Market under the symbol “LSTG”.

 

The following table summarizes the high and low historical closing prices of the Company’s common stock for the periods indicated.

 

**Fiscal Year Ended December 31, 2013**

 

 

 

**High**

** **

** **

**Low**

 

 

 

 

 

 

 

 

First Quarter

 

 
0.158
 

 

 
0.032
 

Second Quarter

 

 
0.059
 

 

 
0.031
 

Third Quarter

 

 
0.035
 

 

 
0.021
 

Fourth Quarter

 

 
0.023
 

 

 
0.012
 

 

**Fiscal Year Ended December 31, 2014**

 

 

 

**High**

** **

** **

**Low**

 

 

 

 

 

 

 

 

First Quarter

 

 
0.033
 

 

 
0.008
 

Second Quarter

 

 
0.015
 

 

 
0.006
 

Third Quarter

 

 
0.035
 

 

 
0.006
 

Fourth Quarter

 

 
0.023
 

 

 
0.004
 

 

Holders of our common stock are entitled to receive dividends as may be declared by the Board of Directors. The Company’s Board of Directors is not restricted from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated that cash dividends will ever be paid.

 

The Company’s Articles of Incorporation as amended authorize the Board of Directors to issue up to 30,000,000 shares of preferred A stock. The provisions in the Articles of Incorporation relating to the preferred stock allow directors to issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by our management.

 

Effective March 1, 2019 the Company’s common stock was reversed split on a 100-for-1 basis.

 

As of, June 25, 2019 the Company had 1,434,720 outstanding shares of common stock which were owned by approximately 21 shareholders of record.

 

**Item 6. Selected Financial Data**

 

Not applicable.

 

 7  

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.**

 

The Company was inactive during the two years ended December 31, 2014 and 2013. As a result of its inactivity, the Company generated no revenue, had no expenses and had no assets for the year ended December 31, 2014. 

 

The Company did not, as of December 31, 2014, have any significant capital requirements. 

 

The Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way.

 

The Company does not know of any significant changes in expected sources and uses of cash.

 

The Company does not have any commitments or arrangements from any person to provide it with any equity capital. 

 

**Item 7A. Quantitative and Qualitative Disclosure about Market Risk**

 

Not applicable.

 

**Item 8. Financial Statements and Supplementary Data.**

 

See the financial statements attached to this report.

 

**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.**

 

Not applicable. 

 

**Item 9A. Controls and Procedures.**

 

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive and Financial Officers of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive and Financial Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of December 31, 2014, our disclosure controls and procedures were not effective. However, a controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

**Management's Report on Internal Control over Financial Reporting**

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of the company’s Principal Executive and Financial Officers and implemented by its Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles.

 

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 of compliance with the policies or procedures may deteriorate.

 

 8  

 

The Company’s Principal Executive and Financial Officer evaluated the effectiveness of its internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.

 

Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2014. Due to the following:

 

|   | · | the lack of formal written documentation relating to the design of the Company’s controls.                                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |        |                                                                                                                                                                                                      |
|   | · | the Company did not maintain adequate segregation of duties related to job responsibilities for initiating, authorizing, and recording of certain transactions due to the small size of our company. |
|        |        |                                                                                                                                                                                                      |
|   | · | the Company does not have sufficient personnel to provide adequate risk assessment functions.                                                                                                        |

 

Notwithstanding the above, a controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Additionally, this is a smaller reporting emerging growth company with few expenses and no revenue. The real need for effective control systems at this point in time are deemed not to be necessary.

 

**Changes in Internal Control Over Financial Reporting**

 

There was no change in the Company’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

**Item 9B. Other Information.**

 

None.

 

**Item 10. Directors, Executive Officers and Corporate Governance.**

 

The Company’s current officers and directors are listed below.

 

| **Name**       |   | **Age** |   | **Position**                                                     |
|----------------|--------|---------|--------|------------------------------------------------------------------|
|                |        |         |        |                                                                  |
| William Alessi |   | 48      |   | Chief Executive, Financial and Accounting Officer and a Director |
| S. Mark Spoone |   | 52      |   | Director                                                         |

 

Directors are generally elected at an annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. Executive officers are elected by directors and serve at the board’s discretion.

 

Mr. Alessi, has been the Founder and CEO of Alpha Modus Corp since August 2014, Managing Director of Hybrid Titan Management, LLC since September 11, 2000. He was formerly the interim CEO of RMD Entertainment Group, Inc. from April of 2017 through October of 2017, and was the interim CEO of Land Star, Inc. from April of 2017 to December of 2017.

 

Mr. Spoone is the current CEO of American Hemp Ventures, Inc., was the founder of Cannalife USA, Ltd and since 2013 has been its Chief Executive Officer. Cannalife is one of the first companies to develop and market beverages using byproducts of hemp as an essential ingredient. Mr. Spoone is one of the founders of the National Hemp Associations.

 

 9  

 

The Company believes that its director is qualified to serve as a director due to his experience in the capital markets.

 

The Company does not have an independent director, as that term is defined in Section 803 of the NYSE Company Guide. The Company does not have a financial expert.

 

The Company has not adopted a code of ethics applicable to its principal executive, financial and accounting officers and persons performing similar functions.

 

*Management Changes.*

 

|   | · | In August 2017, Angela Collette was appointed receiver of the Company pursuant to a petition filed by the Company’s creditors in District Court, Harris County, Texas. In addition, in 2018 Ms. Collette was appointed President, Secretary, Treasurer and a director of the Company. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |        |                                                                                                                                                                                                                                                                                             |
|   | · | In February 2018, William Alessi was appointed a director and the Company’s Chief Executive, Financial and Accounting Officer.                                                                                                                                                        |
|        |        |                                                                                                                                                                                                                                                                                             |
|   | · | Following Mr. Alessi’s appointment as a director of the Company, Ms. Collette’s position as receiver ended and Ms. Collette resigned as an officer and director of the Company.                                                                                                 |
|        |        |                                                                                                                                                                                                                                                                                             |
|   | · | Prior to the receivership, Mark Townsend was the Company’s sole officer and director. Mr. Townsend was removed in February 2018.                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                        |
|   | · | On December 3, 2018 the Company appointed S. Mark Spoone to be a director.                                                                                                                                                                                                                  |

 

**Item 11. Executive Compensation.**

 

The following table summarizes the compensation earned by the Company’s principal executive officers during the two years ended December 31, 2014.

 

| **Name and**            |   | **Fiscal** |   | **Salary** |        |   | **Bonus** |       |        | **Stock**

**Awards** |   |       | **Option**

**Awards** |   |   | **Other Annual**

**Compensation** |        |   | **Total** |       |
|-------------------------|--------|------------|--------|------------|-------------|--------|-----------|------------|-------------|-----------------------|--------|------------|------------------------|--------|--------|------------------------------------|-------------|--------|-----------|------------|
| **Principal Position**  |   | **Year**   |   | ** ** | **(1****)** |        |      | ** ** | **(2****)** |                       |   | ** ** | **(3****)**            |        |   | ** **                         | **(4****)** |        |      | ** ** | **(5****)** |  |   | **($**) |   |
|                    |   |       |   |       |        |   |      |       |        |                  |   |       |                   |   |   |                               |        |   |      |       |   |   |   |   |   |
| Mark Townsend           |   | 2014       |   | $          | --          |   |      |       | --          |                  |   |       | --                     |   |   |                               | --          |   |      |       | -- |   |   | $ | -- |   |
| Chief Executive Officer |   |  2013 |   | $          | --          |   |      |       | --          |                  |   |       | --                     |   |   |                               | --          |   |      |       | -- |   |   | $ | -- |   |

______

| (1) | The dollar value of salary (cash and non-cash) earned.                                                                                    |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The dollar value of bonus (cash and non-cash) earned.                                                                                     |
| (3) | The value of the shares of restricted stock issued as compensation for services computed in accordance with ASC 718 on the date of grant. |
| (4) | The value of all stock options computed in accordance with ASC 718 on the date of grant.                                                  |
| (5) | All other compensation received that could not be properly reported in any other column of the table.                                     |

 

 10  

 

*Long-Term Incentive Plans.* The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans.

 

*Employee Pension, Profit Sharing or other Retirement Plans.* The Company does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.

*Compensation of Directors.* The Company did not compensate its directors for acting a such during the years ended December 31, 2014 or 2013.

 

*Compensation Committee Interlocks and Insider Participation.* During the year ended December 31, 2014, none of the Company’s officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of the Company’s directors.

 

**Item 12. Security Ownership of Certain Beneficial Owners and Management.**

 

The following table lists, as of June 25, 2019, the shareholdings of (i) each person owning beneficially 5% or more of the Company’s outstanding shares of common stock; (ii) each executive officer of the Company, and (iii) all officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment power over his shares of common stock.

 

| **Name and Address**                                |   | **Number of**

**Shares** |    |   | **Percent of**

**Class** |   |
|-----------------------------------------------------|--------|---------------------------|---------|--------|---------------------------|--------|
|                                                |   |                      |    |   |                      |   |
| William Alessi                                      |   |                      | 100,000 |   |                      | Nil    |   |
| 20311 Chartwell Center Drive                        |   |                      |    |   |                      |   |   |
| Suite 1469                                          |   |                      |    |   |                      |   |   |
| Cornelius, NC 28031                                 |   |                      |    |   |                      |   |   |
|                                                |   |                      |    |   |                      |   |   |
| S. Mark Spoone                                      |   |                      | --      |   |                      |   | -- |   |
| 4833 Front Street, Ste B-405

Castle Rock, CO 80104 |   |                      |    |   |                      |   |   |   |
|                                                |   |                      |    |   |                      |   |   |   |
| All Officers and Directors as a group (2 persons)   |   |                      | 100,000 |   |                      | Nil    |   |

 

Mr. Alessi also owns 12,000,000 shares of the Company’s Series A Preferred stock, which represents 40% of the outstanding shares of this class. Each share of Series A Preferred stock is entitled to 100 votes on any matter upon which the holder of common stock is entitled to vote.

 

Mr. Spoone owns 12,000,000 shares of the Company’s Series A Preferred stock, which represents 40% of the outstanding shares of this class. Each share of Series A Preferred stock is entitled to 100 votes on any matter upon which the holder of common stock is entitled to vote.

 

**Item 13. Certain Relationships and Related Transactions, and Director Independence.**

 

In February 2018 William Alessi, our sole director and Executive Officer was issued 100,000 shares of common stock and 30,000,000 shares of our Series A preferred stock. Each Series A preferred share is entitled to 100 votes on any matter upon which the holder of common stock is entitled to vote.

 

In February 2019 Mr. Alessi, , returned 12,000,000 shares of the Company’s Series A preferred stock to the Company for cancellation. 

 

On February 6, 2019, the Company issued 12,000,000 shares of its Series A preferred stock to S. Mark Spoone in consideration for the acquisition of Spoone’s trademarks and intellectual property which includes all rights and trade secrets to the hemp-derived CBD-infused line of consumer beverages. 

 

Prior to the cancellation, Mr. Alessi owned 30,000,000 shares of the Company’s Series A Preferred Stock, and after Mr. Alessi’s cancellation and the issuance of the preferred shares to Mr. Spoone, Mr. Alessi and Mr. Spoone each owned 12,000,000 shares of the Company’s Series A Preferred Stock.

 

 11  

 

The cancellation of Mr. Alessi’s Series A preferred shares, and the issuance of the Shares to Mr. Spoone (the “ Cancellation and Issuance ”), constitutes a change in control of the Company as each share of Series A preferred stock entitles the holder thereof 100 votes per share, and there were approximately 143,361,963 shares of Company common stock outstanding, and 30,000,000 shares of Series A preferred stock outstanding, immediately prior to the Cancellation and Issuance. Mr. Alessi therefore controlled approximately 76.4% of the votes associated with the capital stock of the Company before the Cancellation and Issuance, and after the Cancellation and Issuance, Mr. Alessi and Mr. Spoone now each control approximately 38.2% of the votes associated with the capital stock of the Company.

 

On February 6, 2019 Mr. Alessi, sold 6,000,000 shares of his Series A preferred stock to Chris Chumas.

 

**Item 14. Principal Accountant Fees and Services.**

 

The following table shows the fees billed to us by our independent auditors for the years ended December 31, 2014 and 2013.

 

| **Services**       |   | **2014** |  |   | **2013** |   |
|--------------------|--------|----------|--|--------|----------|--------|
| Audit fees         |   | $        |  |        |     | $      |  |   |
| Audit-related fees |        |          |  |        |          |        |  |   |
| Tax fees           |        |          |  |        |          |        |  |   |
| All other fees     |        |          |  |        |          |        |  |   |
| **Total fee**      |   | $        |  |        |     | $      |  |  |

 

Audit fees and audit related fees represent amounts billed for professional services rendered for the audit of our annual financial statements and the review of our interim financial statements. Before our independent accountants were engaged by to render these services, their engagement was approved by our Directors.

 

**Item 15. Exhibits and Financial Statement Schedules.**

 

The following exhibits are filed with this Form 10-K or incorporated by references:

 

| **Exhibit No.** |   | **Description**                                                  |
|-----------------|--------|------------------------------------------------------------------|
|                 |        |                                                             |
| 3.1             |   | Amended and Restated Articles of Incorporation.(1)               |
| 3.2             |   | Bylaws(1)                                                        |
| 31.1            |   | Certification by the Principal Executive Officer                 |
| 31.2            |   | Certification by the Principal Financial Officer                 |
| 32.1            |   | Certifications by the Principal Executive and Financial Officers |

_______ 

(1)Incorporated by reference only as filed with Form 10-K on May 25, 2018

 

 

 12  

 

**FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

 

**INDEX TO FINANCIAL STATEMENTS**

  

Consolidated Balance Sheets as of December 31, 2014 and 2013

 

F-3

 

 

Consolidated Statements of Operations for the years ended December 31, 2014 and 2013

 

F-4

 

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013

 

F-5

 

 

Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2014 and 2013

 

F-6

 

 

 

 

Notes to the Consolidated Financial Statements

 

F-7

 

 

 F-1  

  

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

The Board of Directors and Stockholders

Lone Star Gold, Inc.

 

**Opinion on the Financial Statements**

 

We have audited the accompanying consolidated balance sheets of Lone Star Gold, Inc. (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, stockholders' deficit, and cash flows, for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013, and the results of its operations and cash flows for each of the two years in the period ended December 31, 2014, in conformity with U.S generally accepted accounting principles.

 

**Basis for Opinion**

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

**Emphasis of a Matter**

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the financial statements, the Company has accumulated losses and no operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Thayer O'Neal Company, LLC

 

Thayer O’Neal Company, LLC

We have served as the Company's auditor since 2018.

Houston, Texas

July 11, 2019

 

 F-2 *Table of Contents*

 

**LONE STAR GOLD, INC.**

**CONSOLIDATED BALANCE SHEETS**

 

|                                                                                                         |   | **DECEMBER 31,** |       |
|--------------------------------------------------------------------------------------------------------------|--------|------------------|------------|
|                                                                                                         |   | **2014**         |       |   | **2013** |   |
|                                                                                                         |   |             |       |   |   |   |
| **ASSETS**                                                                                                   |   |             |       |   |   |   |
|                                                                                                         |   |             |       |   |   |   |
| **CURRENT ASSETS**                                                                                           |   |             |       |   |   |   |
| Cash                                                                                                         |   | $                | -          |   |   | $ | - |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| **TOTAL ASSETS**                                                                                             |   | $                | -          |   |   | $ | - |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT**                                                                    |   |             |       |   |   |   |   |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| **CURRENT LIABILITIES**                                                                                      |   |             |       |   |   |   |   |   |
| Accounts payable                                                                                             |   | $                | -          |   |   | $ | 110,421 |   |
| Accrued liabilities                                                                                          |   |             | -          |   |   |   | 54,627 |   |
| Convertible notes payable                                                                                    |   |             | -          |   |   |   | 73,555 |   |
| Derivative liability                                                                                         |   |             | -          |   |   |   | 147,659 |   |
| Due to related party                                                                                         |   |             | 38,910     |   |   |   | 38,910 |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| **TOTAL LIABILITIES**                                                                                        |   |             | 38,910     |   |   |   | 425,172 |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| **STOCKHOLDERS' DEFICIT**                                                                                    |   |             |       |   |   |   |   |   |
| Common stock, authorized 150,000,000, par value $0.001 issued and outstanding - 1,432,620 (2013 - 1,096,837) |   |             | 1,433      |   |   |   | 1,097 |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| Additional paid-in capital                                                                                   |   |             | 5,088,968  |   |   |   | 5,015,749 |   |
|                                                                                                         |   |             |       |   |   |   |   |   |
| Accumulated deficit                                                                                          |   |             | (5,129,311 | ) |   |   | (5,442,018 | ) |
|                                                                                                         |   |             |       |   |   |   |   |   |
| Total stockholders' deficit                                                                                  |   |             | (38,910    | ) |   |   | (425,172 | ) |
|                                                                                                         |   |             |       |   |   |   |   |   |
| **TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT**                                                              |   | $                | -          |   |   | $ | - |   |

 

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

 

 F-3 *Table of Contents*

 

**LONE STAR GOLD, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

 

|                                                        |   | **FOR THE YEARS ENDED**

**DECEMBER 31,** |      |
|-------------------------------------------------------------|--------|-------------------------------------------|-----------|
|                                                        |   | ** 2014**                            |      |   | ** 2013** |   |
|                                                        |   |                                      |      |   |   |   |
| **REVENUE**                                                 |   | $                                         | -         |   |   | $ | - |   |
|                                                        |   |                                      |      |   |   |   |   |   |
| **EXPENSES**                                                |   |                                      |      |   |   |   |   |   |
| Income(loss) from discontinued operations                   |   |                                      | 165,048   |   |   |   | (1,701,446 | ) |
|                                                        |   |                                      |      |   |   |   |   |   |
| **OTHER INCOME (EXPENSE)**                                  |   |                                      |      |   |   |   |   |   |
| Financing costs                                             |   |                                      | -         |   |   |   | (49,021 | ) |
| Derivative liability Settlement                             |   |                                      | 147,659   |   |   |   | - |   |
|                                                        |   |                                      |      |   |   |   |   |   |
| Total other income (expense)                                |   |                                      | 147,659   |   |   |   | (49,021 | ) |
|                                                        |   |                                      |      |   |   |   |   |   |
| **NET INCOME(LOSS)**                                        |   |                                      | 312,707   |   |   |   | (1,750,467 | ) |
|                                                        |   |                                      |      |   |   |   |   |   |
| Net Income(loss) per share- basic and diluted               |   | $                                         | 0.22      |   |   | $ | (1.74 | ) |
|                                                        |   |                                      |      |   |   |   |   |   |
| Weighted average number of common shares- basic and diluted |   |                                      | 1,382,879 |   |   |   | 1,004,448 |   |

 

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

 

 F-4 *Table of Contents*

 

**LONE STAR GOLD, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

 

|                                                                               |   | ** FOR THE YEARS ENDED** |     |
|------------------------------------------------------------------------------------|--------|-------------------------------|----------|
|                                                                               |   | ** DECEMBER 31,**        |     |
|                                                                               |   | ** 2014**                |     |   | ** 2013** |   |
| Operating activities                                                               |   |                          |     |   |   |   |
| Net income(Loss)                                                                   |   | $                             | 312,707  |   |   | $ | (1,750,467 | ) |
| Adjustments to reconcile net income(loss) to net cash used in operating activities |   |                          |     |   |   |   |   |   |
| Impairment and depreciation                                                        |   |                          | -        |   |   |   | 217,653 |   |
| Stock issued for expenses                                                          |   |                          | -        |   |   |   | 916,603 |   |
| Change in derivative liability                                                     |   |                          | (147,659 | ) |   |   | 159,136 |   |
| Changes in operating assets and liabilities                                        |   |                          |     |   |   |   |   |   |
| Prepaid expenses                                                                   |   |                          | -        |   |   |   | 152 |   |
| Accounts payable and accrued liabilities                                           |   |                          | (165,048 | ) |   |   | (40,140 | ) |
|                                                                               |   |                          |     |   |   |   |   |   |
| Cash used in Operating Activities                                                  |   |                          | -        |   |   |   | (497,063 | ) |
|                                                                               |   |                          |     |   |   |   |   |   |
| Financing activities                                                               |   |                          |     |   |   |   |   |   |
| Proceeds from sale of common stock                                                 |   |                          | -        |   |   |   | 419,063 |   |
| Notes payable - net                                                                |   |                          | -        |   |   |   | 78,000 |   |
|                                                                               |   |                          |     |   |   |   |   |   |
| Cash used in financing activities                                                  |   |                          | -        |   |   |   | 497,063 |   |
|                                                                               |   |                          |     |   |   |   |   |   |
| Net change in cash                                                                 |   |                          | -        |   |   |   | - |   |
|                                                                               |   |                          |     |   |   |   |   |   |
| Cash and cash equivalents - beginning of year                                      |   |                          | -        |   |   |   | - |   |
|                                                                               |   |                          |     |   |   |   |   |   |
| Cash and cash equivalents - end of year                                            |   | $                             | -        |   |   | $ | - |   |
|                                                                               |   |                          |     |   |   |   |   |   |
| Supplemental disclosure of cash flow information                                   |   |                          |     |   |   |   |   |   |
| Settlement of convertible notes payable through issuance of common stock           |   | $                             | (73,555  | )  |   | $  | - |   |

 

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

 

 F-5 *Table of Contents*

 

**LONE STAR GOLD, INC.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT**

**FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013**

  

|                                             |       |             | ** **  | ** ** | ** **  | ** ** | ** ** | **Additional**  | ** ** | ** ** | ** **  | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------|------------|------------------|-------------|------------|-------------|------------|------------|-----------------|------------|------------|-------------|------------|------------|------------|------------|
| ** **                                       | ** ** | **Common Stock** | ** **  | ** ** | **Paid-In** | ** ** | ** ** | **Accumulated** | ** ** | ** ** | ** **  | ** ** |
| ** **                                       | ** ** | **Shares**       | ** **  | ** ** | **Amount**  | ** ** | ** ** | **Capital**     | ** ** | ** ** | **Deficit** | ** ** | ** ** | **Total**  |       |
|                                             |       |             |        |       |        |       |       |            |       |       |        |       |       |       |       |
| Balance - January 1, 2013                        |       |             | 89,994,663  |       |        | $          | 89,995     |            |       | $          | 3,497,642   |       |       | $          | (3,689,885 | ) |   | $ | (102,248 | ) |
| Reverse split of common stock 100:1              |       |             | (89,094,716 | )     |        |       | (89,095    | )          |       |       | 89,095      |       |       |       | -          |   |   |   | - |   |
| Issuance of common stock for cash                |       |             | 163,100     |       |        |       | 163        |            |       |       | 418,900     |       |       |       | -          |   |   |   | 419,063 |   |
| Shares issued for services                       |       |             | 33,790      |       |        |       | 34         |            |       |       | 14,909      |       |       |       | -          |   |   |   | 14,943 |   |
| Stock based compensation                         |       |             | -           |       |        |       | -          |            |       |       | 916,663     |       |       |       | -          |   |   |   | 916,663 |   |
| Debt discount on convertible notes               |       |             | -           |       |        |       | -          |            |       |       | 53,000      |       |       |       | -          |   |   |   | 53,000 |   |
| Conversion of notes payable to common stock      |       |             | -           |       |        |       | -          |            |       |       | 25,540      |       |       |       | -          |   |   |   | 25,540 |   |
| Net loss                                         |       |             | -           |       |        |       | -          |            |       |       | -           |       |       |       | (1,752,133 | ) |   |   | (1,752,133 | ) |
|                                             |       |             |        |       |        |       |       |            |       |       |        |       |       |       |       |   |   |   |   |   |
| Balance - December 31, 2013                      |       |             | 1,096,837   |       |        |       | 1,097      |            |       |       | 5,015,749   |       |       |       | (5,442,018 | ) |   |   | (425,172 | ) |
| Transfer                                         |       |             | 15,218      |       |        |       | 15         |            |       |       | (15         | )          |       |       | -          |   |   |   | - |   |
| Conversion of notes payable to common stock |       |             | 320,565     |       |        |       | 321        |            |       |       | 73,234      |       |       |       | -          |   |   |   | 73,555 |   |
| Net income                                       |       |             | -           |       |        |       | -          |            |       |       | -           |       |       |       | 312,707    |   |   |   | 312,707 |   |
|                                             |       |             |        |       |        |       |       |            |       |       |        |       |       |       |       |   |   |   |   |   |
| Balance - December 31, 2014                      |       |             | 1,432,620   |       |        | $          | 1,433      |            |       | $          | 5,088,968   |       |       | $          | (5,129,311 | ) |   | $ | (38,910 | ) |

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

 

 F-6 *Table of Contents*

 

****LONE STAR GOLD, INC.****

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2014**

 

**NOTE 1 – NATURE OF OPERATIONS AND DISCONTINUANCE OF BUSIENSS**

 

Lone Star Gold, Inc. (the “Company” or “Lone Star”), formerly known as Keyser Resources, Inc., was incorporated in the State of Nevada on November 26, 2007. The Company is an Exploration Stage Company as defined by Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 915 Development Stage Entities.

 

On January 26, 2012, the Company, acting through a subsidiary, Amiko Kay, S. de R.L. de C.V., a company organized under the laws of Mexico (“Amiko Kay”), entered into a Joint Venture Agreement (the “JV Agreement”) with Miguel Angel Jaramillo Tapia (“Jaramillo”), a resident of Mexico. Under the JV Agreement, Amiko Kay and Jaramillo agreed to process mine tailings located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico (the “Tailings”), and, after processing, to use, market and sell any minerals extracted from the Tailings. The Company owns 99% of the issued and outstanding membership interests of Amiko Kay. The JV Agreement provides Amiko Kay the right to receive 65% of the net revenues from the sale of any materials extracted from the Tailings.

 

Shortly after September 30, 2013, the Company ceased operation as it was in default of certain creditor obligations. In 2017, the Company was put into receivership to satisfy those outstanding creditor claims. In 2018 the Company emerged from receivership and began bringing its filings with the Securities and Exchange Commission up to date.

 

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

(a) Basis of Presentation

 

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

 

(b) Principles of Consolidation 

 

The consolidated financial statements include the accounts of the Company and its subsidiary. 

 

All intercompany accounts and transactions have been eliminated in consolidation.

 

(c) Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 

 

(d) Net Income (Loss) Per Common Share

 

The Company computes net income or loss per share in accordance with ASC 260 Earnings per Share. Under the provisions of the Earnings per Share Topic ASC, basic net income (loss) per share is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.

 

 F-7 *Table of Contents*

 

(e) Income Taxes

 

The Company accounts for its income taxes in accordance with ASC 740 Income Taxes, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards as realization cannot be determined to be more likely than not. 

 

The statement establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions which meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns and the adoption of the statement had no material impact to the Company’s consolidated financial statements. The Company files tax returns in the US and states in which it has operations and is subject to taxation. Tax years subsequent to 2013 remain open to examination by U.S. federal and state tax jurisdictions.

 

(f) Discontinued operations

 

We discontinued operations during the year ended December 31, 2013. All prior operations have been presented in the statement of operations and the cash flow statement as net income or loss from discontinued operations.

 

**NOTE 3 – GOING CONCERN**

 

The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

The Company’s financial statements have been prepared on the basis that the Company has ceased operations for the time being and is in the process of pursuing business opportunities for the Company to resume as a going concern.

 

As reflected in the consolidated financial statements, the Company had an accumulated deficit of $(5,129,311) at December 31, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern in the future once it acquires a viable entity.

 

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company is unable to continue as a going concern.

 

**NOTE 4 - INCOME TAXES**

 

The Company operates in the United States; accordingly, federal and state income taxes have been provided based upon the tax laws and rates of the US. Deferred taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse.

 

The Company is subject to United States income taxes at a rate of 34%. The Company has been inactive and consequently the recovery of income taxes from losses carried forward are unlikely. No disclosure of valuation allowance changes is necessary:

 

 F-8 *Table of Contents*

 

**NOTE 5 – RELATED PARTY TRANSACTIONS**

 

All related party transactions are recorded at the exchange amount which is the value established and agreed to by the related party.

 

A payable to a related party of $17,574 to Maurice Bideaux, the Company’s former chief executive officer and director, was forgiven by Mr. Bideaux in 2010. An additional advance from Mr. Bideaux of $38,910 remains unpaid.

 

**NOTE 6 - EQUITY**

 

Common Shares 

 

On February 28, 2019, the Company was advised that FINRA had received the necessary documentation to announce a 100:1 reverse split. This corporate action took effect on 3/1/2019 and on that date every 100 outstanding shares of the Company’s common stock share were automatically converted into one share of common stock. Accordingly, all share and per share information has been restated to retroactively show the effect of this reverse split.

 

**NOTE 7 – SUBSEQUENT EVENTS**

 

The Company has evaluated all transactions from December 31, 2014 through the financial statement issuance date for subsequent event disclosure consideration and noted no significant subsequent event that needs to be disclosed except as follows:

 

In February 2018 William Alessi, the Company’s sole director and Executive Officer was issued 100,000 shares of common stock and 30,000,000 shares of Series A preferred share. Each Series A preferred share is entitled to 100 votes on any matter upon which the holder of common stock is entitled to vote.

 

In February 2019 Mr. Alessi returned 12,000,000 shares of the Company’s Series A preferred stock to the Company for cancellation. 

 

On February 6, 2019, the Company issued 12,000,000 shares of its Series A preferred stock to S. Mark Spoone in consideration for the acquisition of Spoone’s trademarks and intellectual property which includes all rights and trade secrets to the hemp-derived CBD-infused line of consumer beverages.

 

After Mr. Alessi’s cancellation and the issuance of the shares to Mr. Spoone, Mr. Alessi and Mr. Spoone each owned 12,000,000 shares of the Company’s Series A Preferred Stock.

 

The cancellation of Mr. Alessi’s Series A preferred shares, and the issuance of the preferred shares to Mr. Spoone (the “ Cancellation and Issuance ”), constitutes a change in control of the Company as each share of Series A preferred shares entitles the holder thereof 100 votes per share, and there were approximately 143,361,963 shares of Company common stock outstanding, and 30,000,000 shares of Series A preferred stock outstanding, immediately prior to the Cancellation and Issuance. Mr. Alessi therefore controlled approximately 76.4% of the votes associated with the capital stock of the Company before the Cancellation and Issuance, and after the Cancellation and Issuance, Mr. Alessi and Mr. Spoone now each control approximately 38.2% of the votes associated with the capital stock of the Company.

 

On February 6, 2019 Mr. Alessi sold 6,000,000 shares of his Series A preferred stock to Chris Chumas.

 

On February 28, 2019, the Company was advised that FINRA had received the necessary documentation to announce a 1:100 reverse split. This corporate action took effect on 3/1/2019. 

 

 F-9  

 

**SIGNATURES**

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

|                      | **LONE STAR GOLD, INC.** |                                                   |
|---------------------------|--------------------------|---------------------------------------------------|
|                           |                          |                                                   |   |
| Dated: July 10, 2019 | By:                      | */s/ William Alessi*                              |  |
|                           |                     | William Alessi                                    |  |
|                           |                     | Chief Executive, Financial and Accounting Officer |  |

 

Pursuant to the requirements of the Securities Exchange Act of l934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

| **Signature**        |   | **Title**                                 |   | **Date**      |
|----------------------|--------|-------------------------------------------|--------|---------------|
|                      |        |                                           |        |          |
| */s/ William Alessi* |   | Chief Executive, Financial and Accounting |   | July 10, 2019 |
| William Alessi       |   | Officer and a Director                    |        |               |
|                      |        |                                           |        |          |
| */s/ S. Mark Spoone* |   | Director                                  |   | July 10, 2019 |
| S. Mark Spoone       |        |                                           |        |               |

 

 

13