EDGAR 10-K Filing

Company CIK: 1023198
Filing Year: 2021
Filename: 1023198_10-K_2021_0001161697-21-000489.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Overview
We were incorporated under the laws of the State of Delaware, August 18, 1992. Prior to the 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 Acquisition, we have ceased to be a “shell company” and will continue as a publicly traded company under the name StemGen, Inc. The existing business operations of D3esports, Inc. will continue as our wholly-owned subsidiary.
On January 29, 2019 (the “Closing Date”), we completed and closed the acquisition (the “Acquisition”) under an Agreement and Plan of Reorganization (the “Reorganization Agreement”), entered into by and among (i) StemGen, Inc.(“StemGen”); (ii) D3esports, Inc., a Wyoming corporation (“D3esports”); and (iii) the shareholders of D3esports (“Sellers”) pursuant to which D3esports became a wholly owned subsidiary of ours. Pursuant to the Reorganization Agreement, we acquired from the Sellers all of the issued and outstanding equity interests of D3esports in exchange for 39,631,587 shares of our common stock, par value $0.001 per share and 6,000,000 shares of Preferred Stock, par value $0.001 per share. As a result of the Acquisition, the Sellers, as the former shareholders of D3esports, became the controlling shareholders of the Company. The Acquisition was accounted for as a reverse merger notwithstanding it is legally a reverse acquisition. For accounting purposes, D3esports is the acquiring entity. Current and comparative consolidated financial statements include the accounts of D3esports since inception (May 1, 2018) and StemGen from the date of acquisition (January 29, 2019) (collectively, the “Company”).
Employees and Employment Agreements
We have one employee. None of our employees has a written employment agreement. We are not subject to any collective bargaining agreements.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
This item is not applicable to smaller reporting companies.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
We maintain our corporate offices at 1 Performance Drive, Suite F, Angleton, Texas 77515. Our telephone number is (832) 954-7569.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation in the ordinary course of business. However, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. To our knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or any of our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock trades on the OTC Market Group, Inc.’s OTCQB tier (“OTCQB”) under the symbol SGNI.
Holders
As of the date of this filing, there were 134 holders of record of our common stock.
Dividends
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
Common Stock
We are authorized to issue 100,000,000 shares of common stock, with a par value of $0.001. The closing price of our common stock on June 30, 2021, as quoted by OTC Markets Group, Inc., was $1.00. There were 45,670,063 shares of common stock issued and outstanding as of October 13, 2021. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
Our Articles of Incorporation, our Bylaws, and the applicable statutes of the state of Delaware contain a more complete description of the rights and liabilities of holders of our securities.
During the year ended June 30, 2021, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.
Non-cumulative voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
Securities Authorized for Issuance under Equity Compensation Plans
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of June 30, 2021.
Plan Category
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
Weighted average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance
Equity compensation plans approved by security holders.
-
-
-
Equity compensation plans not approved by security holders.
-
-
-
Total
-
-
-
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Preferred Stock
The Series A Convertible Preferred Stock has a par value of $0.001 and the number of shares constituting such class shall be unlimited. As of June 30, 2021, the Company has 6,000,000 shares of Series A Convertible Preferred Stock issued and outstanding. The Series A Convertible Preferred Stock has priority in liquidation and has a liquidation preference of $1 per share. The Series A Preferred Stock is convertible into shares of common stock at the option of the holder at a rate of three shares of common stock for each share of Series A Convertible Preferred Stock. The Series A Convertible Preferred Stockholders are not entitled to receive dividends and have no voting rights. The Series A Convertible Preferred Stock is redeemable by the Company at any time at $1 per share.
The Company has also authorized 1,000,000 shares of Series E Preferred Stock issued and outstanding. The Series E Preferred Stock has a par value of $0.000001 and ranks junior to all the Company’s common and other preferred stock. There are no dividends on the Series E Preferred Stock and there is no participation in liquidation, dissolution or winding-up distribution of the assets of the Company. The shares of outstanding Series E Preferred Stock shall have the right to vote based on the number of votes equal to twice the number of votes of all outstanding shares of capital stock.
The Company has authorized 1,000,000 shares of Series F Preferred Stock. The Series F Preferred Stock has a par value of $0.000001 per share and ranks junior to all of the Company’s common and other preferred stock. There are no dividends on the Series F Preferred Stock and there is no participation in liquidation, dissolution or winding-up distribution of the assets of the Company. The shares of outstanding Series F Preferred Stock shall have the right to vote based on the number of votes equal to twice the number of votes of all outstanding shares of capital stock such that the holders of the outstanding shares of Series F Preferred Stock shall always constitute sixty-six and two thirds of the voting rights of the Company. The voting rights of the Series F Preferred Stock are superior to the voting rights of the Series E Preferred Stock.
Recent Sales of Unregistered Securities
There have been no recent sales of unregistered securities.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
This item is not applicable to smaller reporting companies.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives, and performance that involve risk, uncertainties, and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
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Background of our Company
We were incorporated under the laws of the State of Delaware, August 18, 1992. Prior to the 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 Acquisition, we have ceased to be a “shell company” and will continue as a publicly traded company under the name StemGen, Inc. The existing business operations of D3esports, Inc. will continue as our wholly-owned subsidiary.
On January 29, 2019 (the “Closing Date”), we completed and closed the acquisition (the “Acquisition”) under an Agreement and Plan of Reorganization (the “Reorganization Agreement”), entered into by and among by and among (i) StemGen, Inc.(“StemGen”); (ii) D3esports, Inc., a Wyoming corporation (“D3esports”); (ii) and the shareholders of D3esports (“Sellers”) pursuant to which D3esports became a wholly owned subsidiary of ours. Pursuant to the Reorganization Agreement, we acquired from the Sellers all of the issued and outstanding equity interests of D3esports in exchange for 39,631,587 shares of our common stock, par value $0.001 per share and 6,000,000 shares of Preferred Stock, par value $0.001 per share. As a result of the Acquisition, the Sellers, as the former shareholders of D3esports, became the controlling shareholders of the Company. The Acquisition was accounted for as a reverse merger notwithstanding it is legally a reverse acquisition. For accounting purposes, D3esports is the acquiring entity. Current and comparative consolidated financial statements include the accounts of D3esports since inception (May 1, 2018) and StemGen from the date of acquisition (January 29, 2019) (collectively, the “Company”).
D3esports was formed on May 1, 2018 and is based in Angleton, TX. D3esports plans to hold monthly time trial format competitions through an eSports platform that allows professional race car drivers and eSport athletes (gamer enthusiasts) to compete for a real experience in a race car and points that can be used to purchase products and services through our partners.
Plan of Operations
Overview. Our plan of operation is the business plan of D3esports. D3esports intends to gain year-round visibility by using a reputable eSport events company with knowledge in the traditional sports and global education space to host ongoing virtual racing for corporate mentors and competitions with the top driver(s) at the end of the season earning the opportunity to compete against professional drivers and a chance to drive a real race car.
Our primary operation is to be the community offering and management of our online competitions in the motorsports arena but not confined to just one sport. We plan to expand to other sports in the future. The USP for D3esports is the Virtual to Real experience. We are negotiating agreements with third-party providers to manage our competition and Microsoft, currently the sole platform of competition to which we also plan to expand into other.
With growing partnerships from component providers in the gaming and eSport space we plan to build and sell professional simulators linking to a points/rewards platform.
Sales and Marketing. Our Marketing is through monthly press releases and social media on Facebook and Instagram coupled with our 24/7 time trial competition with online advertising for sponsors.
Research and Development. We do not currently develop electronic games. We are focused on forming agreements with the best games and virtual racing platforms in the world to optimize the experience but to familiarize the competitor. We are building the ultimate experience to our offering which is a connection to real drivers, engineers our partners technology by hosting eSports tournaments to connect the virtual to real and for the fastest to have the opportunity to passenger or drive a real race car on a real track. Through our partnership and internal research we are molding our competition to the gamer (gamer focused). We are negotiating contracts for competition management with third-party providers and licensing agreements with Microsoft to run with Xbox and Forza 7 Motorsport to add to our intellectual properties. Additionally, we are in talks with app developers for ease of competition registration and entry.
Intellectual Property. We are negotiating agreements with third-party providers to offer the best experience from green to checkered flag. There shall be more agreements with component supplies for our Professional simulator and race team in the future.
Competition. The business of eSports is highly competitive and rapidly growing. Our ability to compete depends upon many factors within and outside our control, including the timely development and introduction of the racing competition which is based on a time-trial format played 24/7 with the Forza 7 Motorsports, played on Xbox and PC.
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As we expand and add more motorsports platforms (partnerships) and sports to D3esports we will publish and market results, and the related enhancements, functionality, performance, reliability, customer service and support and marketing efforts. Due to the relatively low barriers to entry in the eSports market, we expect additional competition from other emerging companies but we have structured a virtual to real offering which can be added to professional team, sim centre and other games companies, we are simply offering a path to pro and enhance the gamers experience to relate to the real world through virtual competition. Many of our existing and potential competitors are substantially larger than us and have significantly greater financial, technical and marketing resources that will compete for available users, developers and talent. With our partnerships, a large number of competitors are in house. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the publishing and promotion of their eSports competitions. There can be no assurance that we will be able to compete successfully against current or future competitors or that competitive pressure will not have a material adverse effect on our business, operating results and financial condition. We have taken our time to see what competitors are producing and letting them launch before us, so they are committed to a path. As they are larger companies their ability to change direction is not as fast as us with a tighter, smaller group.
We believe we do not have adequate funds to fully execute the D3esports business plan for the next twelve months unless we obtain additional funding. However, should we not raise this capital, we will allocate our funding to first assure that all state, federal and SEC requirements are met.
As of June 30, 2021, we had cash on hand of $1,343.
We intend to pursue capital through public or private financing, as well as borrowing and other sources in order to finance our business activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.
Results of Operations
For the fiscal year ended June 30, 2021, the Company had a net loss of $433,143 and negative cash flow from operations of $141,196. As of June 30, 2021, the Company has negative working capital of $1,734,314.
We continue to rely on advances from shareholders to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.
Fiscal year ended June 30, 2021 compared to the year ended June 30, 2020
Revenue
For the year ended June 30, 2021, we recognized revenue of $39,000 compared to $19,350 for the comparable period of 2020. The Company is continuing to try to build a steady and predicable revenue stream.
Cost of Revenue
For the year ended June 30, 2021, we recognized costs of revenue of $30,454 compared to $8,572 for the comparable period of 2020.
General and Administrative Expenses
We recognized general and administrative expenses of $139,993 and $58,475 for the year ended June 30, 2021 and 2020, respectively. The increase in general and administrative expense was primarily the result of increased consulting, and advertising and marketing expenses.
Depreciation
We recognized depreciation of $112,477 and $19,373 during the years ended June 30, 2021 and 2020 related to placing our race cars in service.
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Interest Expense
We recognized interest expense $140,800 and $140,800 for the year ended June 30, 2021 and 2020, respectively. Interest expense represents the stated interest on the outstanding convertible notes payable.
Change in Fair Value of Derivative Instruments
Change in fair value of derivative instruments was a loss of $22,919 and $22,902 for the year ended June 30, 2021 and 2020, respectively, as a result of increased accrued interest.
Net Loss
We incurred a net loss of $433,143 for the year ended June 30, 2021 as compared to a net loss of $230,772 for the year ended June 30, 2020.
Liquidity and Capital Resources
We anticipate needing approximately of $425,000 to fund our operations and to effectively execute our business plan over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status, we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.
We raised the cash amounts to be used in these activities from the sale of common stock and from advances. We currently have negative working capital of $1,734,314.
As of June 30, 2021, we had cash on hand of $1,343. We do not have an adequate amount of cash on hand to fund our future operations.
We have no known demands or commitments and are not aware of any events or uncertainties as of June 30, 2021 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.
Capital Resources
We had no material commitments for capital expenditures as of June 30, 2021. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financing in addition to what is required to fund our present operation.
Additional Financing
Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the financial statements are prepared; actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies, which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
GOING CONCERN - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended June 30, 2021, the Company had a net loss of $433,143 and we had negative cash flow from operations of $141,196. In view of these matters, the Company’s ability to continue as a going concern is dependent upon its ability to achieve a level of profitability or to obtain additional capital to finance its operations. The Company intends on financing its future activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Derivative Instruments
Our debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For bifurcated conversion options that are accounted for as derivative instrument liabilities, we determine the fair value of these instruments using the Black-Scholes option pricing model. This model requires assumptions related to the remaining term of the instrument and risk-free rates of return, our current Common Stock price and expected dividend yield, and the expected volatility of our Common Stock price over the life of the option.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable to smaller reporting companies.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
StemGen, Inc.
Financial Statements
June 30, 2021
Contents
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Changes in Shareholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of StemGen, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of StemGen, Inc. (the Company) as of June 30, 2021 and 2020, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for the each of the two years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the two years ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.
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 misstatement 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.
Going Concern Matter
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matters
Critical audit matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/PWR CPA, LLP
We have served as the Company’s auditor since 2020.
Houston, Texas
October 15, 2021
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STEMGEN, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2021
June 30, 2020
ASSETS
Current assets
Cash and cash equivalents $ 1,343
$
Accounts receivable-related party
-
10,000
Contract asset
-
18,800
Total current assets
1,343
29,036
Property and Equipment
Vehicles - race cars
527,650
387,450
Less: Accumulated amortization
(127,350 )
(19,373 )
Property and Equipment, net
400,300
368,077
TOTAL ASSETS $ 401,643
$ 397,113
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable $ 168,911
$ 195,460
Accounts payable - related party
12,000
-
Deferred revenue
1,500
25,500
Advances from shareholders
249,070
129,267
Accrued interest payable
570,229
429,429
Convertible notes payable to shareholder
563,203
563,203
Derivative liabilities
170,744
147,825
Total current liabilities
1,735,657
1,490,684
Commitments and contingencies
Stockholders’ Deficit
Preferred Stock, 8,000,000 shares authorized:
Series A Preferred Stock, par value $.001, 6,000,000 shares issued and outstanding at June 30, 2021 and 2020, liquidation preference of $6,000,000 at June 30, 2021 and 2020
6,000
6,000
Series E Preferred Stock; par value $0.000001; 1,000,000 shares issued and outstanding at June 30, 2021 and 2020
Series F Preferred Stock; par value $0.000001; 1,000,000 shares issued and outstanding at June 30, 2021 and 2020
Common Stock, par value $.001, 100,000,000 shares authorized, 45,670,063 shares and 45,429,188 shares issued and outstanding at June 30, 2021 and 2020, respectively
45,670
45,429
Additional paid-in capital (Deficit)
(294,266 )
(486,725 )
Accumulated deficit
(1,091,420 )
(658,277 )
Total Stockholders’ Deficit
(1,334,014 )
(1,093,571 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 401,643
$ 397,113
The accompanying notes are an integral part of these consolidated financial statements.
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STEMGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30,
Revenue $ 23,000
$ 15,350
Revenue - related party
16,000
4,000
39,000
19,350
Operating expense:
Cost of revenue
30,454
8,572
General and administrative expenses
139,993
58,475
Depreciation and amortization
112,477
19,373
Total operating expense
282,924
86,420
Loss from operations
(243,924 )
(67,070 )
Interest expense
(140,800 )
(140,800 )
Loss on sale of vehicles
(25,500 )
-
Loss on fair value of derivative liability
(22,919 )
(22,902 )
Net loss $ (433,143 ) $ (230,772 )
Net loss per share - basic and diluted $ (0.01 ) $ (0.01 )
Weighted average number of common shares outstanding - basic and diluted
45,600,110
45,428,442
The accompanying notes are an integral part of these consolidated financial statements
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STEMGEN, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
For the Years Ended June 30, 2021 and 2020
Series A
Preferred Stock
Series E
Preferred Stock
Series F
Preferred Stock
Common Stock
Additional
paid-in
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Total
Balance,
June 30, 2019 6,000,000
$ 6,000
1,000,000
$
1,000,000
$
45,422,188
$ 45,422
$ (493,718 ) $ (427,505 ) $ (869,799 )
Common stock issued for cash -
-
-
-
-
-
7,000
6,993
-
7,000
Net loss -
-
-
-
-
-
-
-
-
(230,772 )
(230,772 )
Balance,
June 30, 2020 6,000,000
$ 6,000
1,000,000
$
1,000,000
$
45,429,188
$ 45,429
$ (486,725 ) $ (658,277 ) $ (1,093,571 )
Common stock issued for vehicles -
-
-
-
-
-
240,875
192,459
-
192,700
Net loss -
-
-
-
-
-
-
-
-
(433,143 )
(433,143 )
Balance,
June 30, 2021 6,000,000
$ 6,000
1,000,000
$
1,000,000
$
45,670,063
$ 45,670
$ (294,266 ) $ (1,091,420 ) $ (1,334,014 )
The accompanying notes are an integral part of these consolidated financial statements.
- 15 -
STEMGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30,
Cash flow from operating activities:
Net loss $ (433,143 ) $ (230,772 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
112,477
19,373
Loss on sale of vehicle
25,500
-
Loss on fair value of derivative liability
22,919
22,902
Changes in operating assets and liabilities:
Accounts receivable - related party
10,000
(10,000 )
Contract asset
18,800
(18,800 )
Accounts payable and accrued liabilities
(26,549 )
15,972
Accounts payable - related party
12,000
-
Deferred revenue
(24,000 )
24,000
Accrued interest payable
140,800
140,800
Net cash used in operating activities
(141,196 )
(36,525 )
Cash flows from investing activities:
Sale of fixed assets
22,500
-
Net cash used in investing activities
22,500
-
Cash flows from financing activities:
Advances from shareholder
119,803
27,010
Proceeds from issuance of common stock
-
7,000
Net cash provided by financing activities
119,803
34,010
Net change in cash
1,107
(2,515 )
Cash and equivalents, beginning of period
2,751
Cash and equivalents, end of period $ 1,343
$
Supplemental disclosure of non-cash investing and financing activities:
Stock issued for vehicles $ 192,700
$ -
The accompanying notes are an integral part of these consolidated financial statements.
- 16 -
STEMGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - We were incorporated under the laws of the State of Delaware, August 18, 1992. Prior to the 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 Acquisition, we have ceased to be a “shell company” and will continue as a publicly traded company under the name StemGen, Inc. The existing business operations of D3esports, Inc. will continue as our wholly-owned subsidiary.
On January 29, 2019 (the “Closing Date”), we completed and closed the acquisition (the “Acquisition”) under an Agreement and Plan of Reorganization (the “Reorganization Agreement”), entered into by and among by and among (i) StemGen, Inc.(“StemGen”); (ii) D3esports, Inc., a Wyoming corporation (“D3esports”); (ii) and the shareholders of D3esports (“Sellers”) pursuant to which D3esports became a wholly owned subsidiary of ours. Pursuant to the Reorganization Agreement, we acquired from the Sellers all of the issued and outstanding equity interests of D3esports in exchange for 39,631,587 shares of our common stock, par value $0.001 per share and 6,000,000 shares of Preferred Stock, par value $0.001 per share. As a result of the Acquisition, the Sellers, as the former shareholders of D3esports, became the controlling shareholders of the Company. The Acquisition was accounted for as a reverse merger notwithstanding it is legally a reverse acquisition. For accounting purposes, D3esports is the acquiring entity. Current and comparative consolidated financial statements include the accounts of D3esports since inception (May 1, 2018) and StemGen from the date of acquisition (January 29, 2019) (collectively, the “Company”).
D3esports was formed on May 1, 2018 and is based in Angleton, TX. D3esports plans to hold monthly time trial format competitions through an eSports platform that allows professional race car drivers and eSport athletes (gamer enthusiasts) to compete for a real experience in a race car and points that can be used to purchase products and services through our partners.
Principles of Consolidation - The consolidated financial statements include the accounts of StemGen, and its subsidiaries, which are majority owned by StemGen. All significant inter-company transactions and balances have been eliminated.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the financial statements.
Cash and Cash Equivalents - The Company considers all highly liquid debt instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.
Property and Equipment - Property and equipment consists of vehicles and website design. The vehicles are three race cars which were contributed as capital at the inception of the Company and recorded at their estimated fair value. Depreciation on the race cars is recognized on a straight-line basis over seven years.
Improvements or betterments of a permanent nature are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains or losses resulting from property disposals are credited or charged to operations in the year of disposal.
Revenue Recognition - The Company recognizes revenue in accordance with ASC Topic 606 whereby revenue is recognized primarily on the date products are delivered to the customer or services are provided. Payments for products or services which have been received prior to the Company fulfilling its performance obligations are deferred until those obligations are satisfied. Costs related to deferred revenue are included in contract assets until the revenue is recognized.
Income Taxes - The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
- 17 -
Earnings (Loss) per Common Share - The Company computes basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. As of June 30, 2021, there were 33,107,010 potentially dilutive shares related to convertible debt, accrued interest and Series A Preferred Stock.
Derivative Instruments - Our debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
Our derivative liability is re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For bifurcated conversion options that are accounted for as derivative instrument liabilities, we determine the fair value of these instruments using the Black-Scholes option pricing model. This model requires assumptions related to the remaining term of the instrument and risk-free rates of return, our current Common Stock price and expected dividend yield, and the expected volatility of our Common Stock price over the life of the option.
Financial Instruments - The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.
FASB ASC 820 Fair Value Measurements and Disclosures defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2021 and 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.
- 18 -
COVID-19 - Since March 31, 2020 and through the date of this report, the entire global economy has been substantially impacted by the COVID-19 pandemic which began in China and has spread to the United States and most other parts of the world. The impacts on the Company’s business from the COVID-19 pandemic include the following factors:
• A negative impact due to the contraction in the sources of capital required to support our continued business strategic efforts.
• A negative impact due to rising bottleneck in the supply chain of goods and services needed to pursue our business strategic effort.
• A negative impact on our human capital resources needed in our business.
NOTE 2 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended June 30, 2021, the Company had a net loss of $433,143. As of June 30, 2021, the Company had negative working capital of $1,734,314. Management does not anticipate having positive cash flow from operations in the near future.
These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.
Management has plans to address the Company’s financial situation as follows:
In the near term, management plans to continue to focus on increasing revenues and raising the funds necessary to fully implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.
In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company, which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.
NOTE 3 - COMMITMENTS
From time to time, we may be involved in litigation in the ordinary course of business. To our knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or any of our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
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NOTE 4 - EQUITY
During the year ended June 30, 2021, the Company issued 240,875 shares of common stock for the purchase of two race cars. The stock was valued at $192,700 based on the market value of the stock on the date of the transaction.
During the year ended June 30, 2020, the Company issued 7,000 shares of common stock and received cash proceeds of $7,000.
There are 8,000,000 shares of preferred stock authorized. The board of directors has designated two series of preferred stock as described below.
The Series A Convertible Preferred Stock has a par value of $0.001 and the number of shares constituting such class shall be unlimited. As of June 30, 2021, the Company has 6,000,000 shares of Series A Convertible Preferred Stock issued and outstanding. The Series A Convertible Preferred Stock has priority in liquidation and has a liquidation preference of $1 per share. The Series A Preferred Stock is convertible into shares of common stock at the option of the holder at a rate of three shares of common stock for each share of Series A Convertible Preferred Stock. The Series A Convertible Preferred Stockholders are not entitled to receive dividends and have no voting rights. The Series A Convertible Preferred Stock is redeemable by the Company at any time at $1 per share.
The Company has also authorized 1,000,000 shares of Series E Preferred Stock issued and outstanding. The Series E Preferred Stock has a par value of $0.000001 and ranks junior to all the Company’s common and other preferred stock. There are no dividends on the Series E Preferred Stock and there is no participation in liquidation, dissolution or winding-up distribution of the assets of the Company. The shares of outstanding Series E Preferred Stock shall have the right to vote based on the number of votes equal to twice the number of votes of all outstanding shares of capital stock.
The Company has authorized 1,000,000 shares of Series F Preferred Stock. The Series F Preferred Stock has a par value of $0.000001 per share and ranks junior to all of the Company’s common and other preferred stock. There are no dividends on the Series F Preferred Stock and there is no participation in liquidation, dissolution or winding-up distribution of the assets of the Company. The shares of outstanding Series F Preferred Stock shall have the right to vote based on the number of votes equal to twice the number of votes of all outstanding shares of capital stock such that the holders of the outstanding shares of Series F Preferred Stock shall always constitute sixty-six and two thirds of the voting rights of the Company. The voting rights of the Series F Preferred Stock are superior to the voting rights of the Series E Preferred Stock.
NOTE 5 - INCOME TAXES
The deferred tax asset as of June 30, 2021 and 2020 was approximately $598,000 and $507,000, respectively, offset by valuation allowances of the same amount resulting in a deferred tax asset of $0 at both June 30, 2021 and 2020. There is no income tax provision for the years ended June 30, 2021 and 2020 due to the change in the valuation allowance. The difference between the effective rate and the statutory rate is the result of the change in the valuation allowance. At June 30, 2021 the Company had an unused net operating loss carry over approximating $2,848,000, that is potentially available to offset future taxable income, which expires beginning 2028.
The Company has not filed its Federal tax returns for 2009 through 2021 and could be subject to penalty for its delinquency. Additionally, the availability of its net operating loss may be subject to adjustment or restriction due to the change in control of the Company during 2019.
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NOTE 6 - CONVERTIBLE NOTES PAYABLE TO SHAREHOLDER
Convertible notes payable consisted of the following at June 30, 2021 and 2020:
Convertible note issued March 31, 2015, maturing March 31, 2017, bearing interest at 10% per year, until maturity, then 25%. Convertible into common stock at a rate of $0.05 per share.
$ 36,340
Convertible note in the original principal amount of $85,465, issued June 30, 2015 and maturing June 30, 2017, bearing interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of $0.05 per share.
85,465
Convertible note in the original principal amount of $277,208, issued September 30, 2015 and maturing September 30, 2018, bearing interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of $0.05 per share
277,208
Convertible note in the original principal amount of $103,072, issued December 31, 2015 and maturing December 31, 2018, bearing simple interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of $0.40 per share.
103,072
Convertible note in the original principal amount of $61,118, issued March 31, 2016 and maturing March 31, 2019, bearing simple interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of a 60% discount to the volume weighted average price for the last five trading days prior to conversion.
61,118
Total convertible notes
$ 563,203
All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.9% of the outstanding stock of the Company. The notes are unsecured and are in default. As of June 30, 2021, there was $570,229 of accrued interest related to these notes. For both the years ended June 30, 2021 and 2020, the Company recorded interest expense of $140,800 and $140,800, respectively, related to these notes.
NOTE 7 - DERIVATIVE LIABILITY
The conversion feature of certain convertible notes payable was accounted for as a derivative liability. The derivative liability at June 30, 2021, was calculated using the Black Scholes method over the expected terms of the convertible notes, with a risk free rate of .06% and volatility of 200%.
Included in the accompanying consolidated statements of operations is a loss arising from the change in fair value of the derivatives of $22,919 and $22,902 for the years ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the Company had a payable of $12,000 to Dawson Racing related to these expenses.
NOTE 8 - RELATED PARTY
The Company has been provided warehouse and office space by an entity owned by Simon Dawson for which $26,600 and $6,000 was expensed during the years ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the Company had a payable of $12,000 to Dawson Racing related to these expenses.
The Company paid its chief executive officer, Simon Dawson, $18,500 and $6,000 during the years ended June 30, 2021 and 2020, respectively, for compensation.
During the year ending June 30, 2021, the Company paid Ian Dawson, a shareholder and relative of Simon Dawson, $5,000 for consulting.
During the years ended June 30, 2021 and 2020, the Company recognized revenue of $16,000 and $4,000, respectively, from Dawson Racing, an entity owned by Simon and Ian Dawson, for sponsorship. As of June 30, 2020, the Company has deferred revenue of $16,000 related to sponsorship and accounts receivable of $10,000 from Dawson Racing. Dawson Racing remitted the payment of $10,000 to the Company in July 2020.
As of June 30, 2021 and 2020, the Company has $249,070 and $129,267 in advances from shareholders. The advances bear no interest and have no repayment terms.
NOTE 9 - SUBSEQUENT EVENTS
Subsequent to June 30, 2021, the Company sold a vehicle for $100,000 cash. Of this cash, $50,000 was paid to Dawson Racing, a related party, for marketing and brand awareness.
- 21 -

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Changes in Accounts
None.
Disagreements with Accountants
There were no disagreements with accountants on accounting and financial disclosures for the year ended June 30, 2021.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Limitations on Systems of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
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;
• 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.
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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.
As of June 30, 2021, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO 2013”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: lack of a functioning audit committee; lack of a majority of independent members and a lack of a majority of outside directors on our board of directors; inadequate segregation of duties consistent with control objectives; and, management is dominated by a single individual. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the audit of our financial statements as of June 30, 2021.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our executive officers and directors are:
NAME
AGE
POSITION(S)
DATE ELECTED OR APPOINTED
Simon Dawson
Director, President, Secretary, and Treasurer
January 29, 2019
Biographies
Simon Dawson joined his father on the Project Libra Race program, which developed the Radical Ford Eco Boost race engine and its first race car in 2012.
This led to his permanent move from North Carolina to Houston to develop a full Radical dealership and track day business, which he runs with his father today.
Over the last six years, Simon and his father have enjoyed great success with Radical Texas selling track day cars, track day experiences and along the way, testing and developing the cars and technologies that will bring them race championships well into the future.
The driving force behind Simon’s passion for motorsports is family, and the dream of making racing an obtainable pastime and sport for all families and inspire the future linking the real and virtual worlds with an investment into eSport for the ultimate experience.
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Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” None of our directors are independent directors under the applicable standards of the SEC and the NASDAQ stock market.
Family Relationships
There are no family relationships among our directors, executive officers or persons nominated to become executive officers or directors.
Involvement in Certain Legal Proceedings
During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.
Arrangements
There are no arrangements or understandings between an executive officer, director or nominee and any other person pursuant to which he was or is to be selected as an executive officer or director.
Committees of the Board of Directors
Our sole director has not established any committees, including an Audit Committee, a Compensation Committee, or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by our sole director. Because we do not have any independent directors, our sole director believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.
While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.
Our sole director is not an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:
• understands generally accepted accounting principles and financial statements,
• is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
• has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
• understands internal controls over financial reporting, and
• understands audit committee functions
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Our Board of Directors is comprised of solely of Mr. Dawson who is involved in our day-to-day operations. We would prefer to have an audit committee financial expert on our board of directors. As with most small, early stage companies until such time our company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officers insurance, the Company does not have any immediate prospects to attract independent directors. When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
WE DO NOT HAVE ANY INDEPENDENT DIRECTORS AND THE COMPANY HAS NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST, AND SIMILAR MATTERS.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The table below summarizes all compensation awards to, earned by, or paid to our named executive officer for all service rendered in all capacities to us for the fiscal years ended June 30, 2021 and 2020.
SUMMARY COMPENSATION TABLE
Name and Principal Position
Fiscal
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
($)
All Other
Compensation
($)
Total
($)
Simon Dawson, CEO
18,500
-
-
-
-
-
-
18,500
6,000
-
-
-
-
-
-
6.000
10,000
-
$1
-
-
-
16,000
26,001
OUTSTANDING EQUITY AWARDS AT JUNE 30, 2021
Option Awards
Stock Awards
Name
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
Option Exercise Price ($)
Option Expiration Date
Number of Shares of Stock That Have Not Vested (#)
Market Value of Shares of Stock That Have Not Vested ($)
Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#)
Equity Incentive Plan Awards: market or Payout Value of Unearned Shares or Other Rights That Have Not Vested ($)
Simon Dawson
-
-
-
-
-
-
-
-
-
Employment Agreements & Retirement Benefits
None of our executive officers is subject to employment agreements, but we may enter into such agreements with them in the future. We have no plans providing for the payment of any retirement benefits.
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Director Compensation
Directors receive no compensation for serving on the Board. We have no non-employee directors.
Our Board of Directors is comprised of Simon Dawson. Mr. Dawson also serves as the CEO of the Company. None of our directors has or had a compensation arrangement with the Company for director services, nor have any of them been compensated for director services since the Company’s inception.
We reimburse our directors for all reasonable ordinary and necessary business related expenses, but we did not pay director’s fees or other cash compensation for services rendered as a director in the year ended June 30, 2021 to any of the individuals serving on our Board during that period. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. We may pay fees for services rendered as a director when and if additional directors are appointed to the Board of Directors.
Director Independence
We do not currently have any independent directors and we do not anticipate appointing additional directors in the foreseeable future. If we engage further directors and officers, however, we plan to develop a definition of independence.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
We do not currently have a stock option plan in favor of any director, officer, consultant, or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole director and officer since our inception; accordingly, no stock options have been granted or exercised by our sole director and officer since we were founded.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. In accordance with SEC rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the applicable table below are deemed beneficially owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. Subject to community property laws, where applicable, the persons or entities named in the tables below have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
The following table sets forth information with respect to the beneficial ownership of our common stock as of June 30, 2021, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our common stock, voting preferred stock or convertible preferred stock, (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. Other than the Acquisition, to our knowledge, there is no arrangement, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.
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Number of Shares of Capital Stock
Beneficially Owned (1)
Percentage
Ownership (3)
Name and Address of Beneficial Owner
Common Stock Preferred Stock
Common Stock Preferred Stock
Landor Investment Corp. (6)
Calle 65 Esta, San Francisco, Local No. 35
Panama City, Panama
10,105,339 1,000,000(4)
22.13% 100%
Simon Dawson
1 Performance Drive, Suite F
Angleton, TX 77515
5,166,663 1,000,000(8)
11.31% 100%
Ian Dawson
1 Performance Drive, Suite F
Angleton, TX 77515
5,166,663
11.31%
Recycled Capital (6)
5712 Southwest Fwy.
Houston, Texas 77057-7508
2,050,000 6,000,000(5)
4.49% 100%
John Pritzlaff
622 Cliffgate Lane
Castle Rock, Colorado 80108
7,500,000
16.42%
Hampton Bay Trading Corp. (7)
2500 Wilcrest Dr., Suite 300
Houston, Texas 77042
4,388,890
9.61%
All executive officers and directors as a group (one person)
5,166,663 1,000,000
11.31% 100%
__________
(1) Under Rule 13d-3 under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the number of shares is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock outstanding on January 29, 2019.
(2) In addition to common stock, Landor Investment Corp. owns 1,000,000 shares of series E preferred stock. The Series E preferred stock has a par value of $0.000001, does not vote because of the superior voting rights of the Series E Preferred Stock, ranks subordinate to the Company’s common stock and Series F Preferred Stock and is not entitled to participate in distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary.
(3) Our calculation of the percentage of beneficial ownership is based on 45,670,063 shares of common stock, 6,000,000 shares of Series A Preferred Stock, 1,000,000 shares of Series E Preferred Stock and 1,000,000 shares of Series F Preferred Stock outstanding as of June 30, 2021.
(4) Represents Series E preferred stock
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(5) Represents Series A preferred stock, each convertible to 3 shares of common stock. The number of shares of the common stock held as of the date hereof is 4.99% of the total outstanding because. all the convertible preferred stock are subject to a conversion cap of 4.99% of the total outstanding. Therefore, the holder of the preferred stock does not have the “right” to hold more than the amount of the cap as expressed by the Commission’s amicus curiae brief in the case of Mark Levy v. Southbrook International Investments, Ltd. (2 nd Cir. Mar 31, 2001). In addition to these shares, Lead Enterprises, Inc. holds several convertible promissory notes which are convertible into a total of approximately 9,622,466 shares of common stock of the Company, all subject to the 4.99% limitation.
(6) Robert Wilson is the natural person who exercises the sole voting and or dispositive powers with respect to the shares of Recycled Capital Corp.
(7) Robert Sonfield is the natural person who exercises the sole voting and or dispositive powers with respect to the shares of Hampton Bay Trading Corp.
(8) Represents Series F preferred stock

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
PWR CPA, LLP was appointed as the independent auditor for the audits of fiscal years ended June 30, 2021 and 2020.
The following table summarizes the fees billed to the Company by its independent accountants, PWR, for the years ended June 30, 2021 and 2020:
Audit Fees
$ 23,250
$ 34,900
Audit Related Fees (1)
$ -
$ -
Tax Fees (2)
$ -
$ -
All Other Fees (3)
$ -
$ -
Total Fees
$ 23,250
$ 34,900
Notes to the Accountants Fees Table:
(1) Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.”
(2) Consists of fees for professional services rendered by our principal accountants for tax related services.
(3) Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit Fees,” “Audit-Related Fees” and “Tax Fees” above.
As part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board. All of the services provided by PWR described above were approved by our Board.
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PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit Description
3.1 Restated Certificate of Incorporation of StemGen, Inc. (1)
3.2 Bylaws of StemGen, Inc. (1)
10.1 Letter of Intent between the company and D3sports dated October 17, 2018 (2)
31.1 Rule 13a-14(a) Certification of Chief Executive Officer (3)
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer and Chief Financial Officer (3)
XBRL Interactive Data (4)
__________
(1) Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on March 17, 2015.
(2) Incorporated by reference to our Form 10-K filed with the Securities and Exchange Commission on November 2, 2018.
(3) Filed or furnished herewith.
(4) To be submitted by amendment.