Overview

GlobeStar Therapeutics Corporation (the "Company") was incorporated on April 29, 2016. The Company's year-end is September 30. On October 4, 2019, the Company filed Articles of Continuance with the Secretary of State of Wyoming to continue its business in the state of Wyoming. As part of these Articles of Continuance, effective October 4, 2019, the Company has no limit on the authorized shares of common stock that can be issued. The Company filed its Certificate of Dissolution with the Secretary of State of Nevada on October 21, 2019 because it is no longer a Nevada corporation.

We changed our name to GlobeStar Therapeutics Corporation on April 27, 2021 to better reflect our expanded platform of products that include breakthrough addition of treatment for Multiple Sclerosis and other neurodegenerative diseases.

GlobeStar Therapeutics Corporation, based in Richland Washington, is a clinical stage Pharmaceutical Company introducing a patented formulation of previously approved drugs for the treatment of Multiple Sclerosis. GlobeStar Therapeutics owns the exclusive global license from the inventors, who are based in Italy. GlobeStar Therapeutics is initiating discussions with the FDA on clinical trial design in preparation for FDA submission and approval pathway.

Prior to the Company's current business plan, the Company was a wellness company dedicated to bringing innovative, effective and high-quality supplement products to the medical, wellness and adult-use markets through our marketing subsidiary, SomaCeuticalsTM





Professional Team

We have adopted a Medical Advisory Board and appointed medical doctors and medical professionals that have extensive education and hands on experience with pharmaceutical and nutraceutical solution for prevention and treatment of disease.

Management's Plan to Attract Capital

In the near term, management will utilize debt financing to complete assembling the professional and management team to commence the process for clinical trials in compliance with FDA protocol. plans to continue to focus on raising the funds necessary to 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 midterm, management will enhance its capital position with a public offering of equity securities to finance clinical trials and the necessary actions to obtain approval of worldwide marketing of our MS treatment

In the long term, marketing the Company's pharmaceutical and nutraceutical products will provide the necessary cash flow to support 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 capital to support near term and midterm business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to support its operations.





Corporate Governance

We have adopted codes and committees for governance of the corporation that include: (i) audit committee charter, (ii) written acknowledgement of code of ethics for directors and senior officers, (iii) compensation committee charter, (iv) confidential information policy, iv) corporate governance guidelines, (vi) executive committee charter, and (vii) nominating committee charter.





Critical Accounting Policies

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates 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 condensed consolidated financial statements are prepared. We regularly review our accounting policies, and how they are applied and disclosed in our condensed consolidated financial statements.


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While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.





Results of Operations

Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020

Revenue. We had no revenue for the three months ended June 30, 2021 and 2020.

Cost of goods sold. We had no cost of goods sold for the three months ended June 30, 2021 and 2020

General and administrative expense. We recognized general and administrative expense of $4,478,111 for the three months ended June 30, 2021 compared to $48,563 for the comparable period of 2020. The increase in general and administrative expense was related primarily to stock-based compensation related to options issued to officers, directors and advisory board members of $4,209,179 and increased officer compensation of related to new officers.

Loss on settlement of liabilities. We recognized $5,438 and $0 loss on the settlement of liabilities during the three months ended June 30, 2021 and 2020. The loss was related to the severance agreement with Alex Blankenship, our former CEO.

Interest expense. We recognized interest expense of $34,949 for the three months ended June 30, 2021 compared to $39,422 for the comparable period of 2020, including amortization of the discount on convertible notes payable of $32,452 and $37,247 during the three months ended June 30, 2021 and 2020, respectively.

Net loss. For the reasons above, we recognized a net loss of $4,518,498 for the three months ended June 30, 2021 compared to $87,895 for the three months ended June 30, 2020.


Nine Months Ended June 30, 2021 Compared to the Nine Months Ended June 30, 2020

Revenue. We had revenue of $0 for the nine months ended June 30, 2021 compared to $77 for the nine months ended June 30, 2020.

Cost of goods sold. We had cost of goods sold of $2,412 for the nine months ended June 30, 2021 compared to $14 for the nine months ended June 30, 2020 related to the write down of inventory kept by the Company's former CEO as part of the severance agreement.

General and administrative expense. We recognized general and administrative expense of $5,006,455 for the nine months ended June 30, 2021 compared to $174,248 for the comparable period of 2020. The increase in general and administrative expense was related primarily to stock-based compensation of $4,209,179 related to stock options for officers and medical advisory board members and $325,000 related to the Series E Preferred stock issued to the new CEO, and increased officer compensation of $115, related to new officers and increased legal fees of $54,655.

Loss on settlement of liabilities. We recognized $317,200 and $0 loss on the settlement of liabilities during the nine months ended June 30, 2021 and 2020. The loss was related to the severance agreement with Alex Blankenship, our former CEO, resulting in a $317,200 loss.

Interest expense. We recognized interest expense of $212,657 for the nine months ended June 30, 2021 compared to $193,149 for the comparable period of 2020. The increase was due primarily to the amortization of the discount on convertible notes payable during the current period in the amount of $201,636 compared to $185,395 during the comparable period of the prior year.

Net loss. For the reasons above, we recognized a net loss of $5,538,724 for the nine months ended June 30, 2021 compared to $367,334 for the nine months ended June 30, 2020.





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Liquidity and Capital Resources

At June 30, 2021, we had cash on hand of $20,746. The Company has negative working capital of $628,755. Net cash used in operating activities for the nine months ended June 30, 2021 was $330,466. Cash on hand is adequate to fund our operations for less than twelve months. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of June 30, 2021.

During the nine months ended June 30, 2021, the Company used cash in operating activities in the amount of $330,466. This consisted of the net loss of $5,538,724, partially offset by the following non-cash operating expenses: stock-based compensation of $4,534,179, amortization of discount of $201,636, and the loss on settlement of liabilities of $317,200. The Company had cash flows from financing activities of $269,500 from the proceeds of sale of common stock units resulting in cash proceeds of $499,500, the repurchase of Series E preferred stock for $325,000, and proceeds from convertible notes payable of $95,000.





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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