LODE-STAR MINING INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes appearing elsewhere in this quarterly report. In addition to historical financial information, the following discussion includes certain forward-looking statements that reflect our plans, estimates and our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. Except as required by applicable law, including the securities laws ofthe United States , we do not intend to update any of the forward-looking statements to conform these statements to actual results. New Business OnDecember 28, 2021 , we entered into an asset purchase agreement (the "Purchase Agreement") withSapir Pharmaceuticals, Inc. , aDelaware corporation ("Sapir"), pursuant to which we purchased certain assets from Sapir used in connection with the proprietary stabilized formulation of the Epigallocatechin-gallate (EGCG) molecule (the "Business") in exchange for 1,000,000 shares of newly-designated Series A preferred stock (the "Preferred Stock"). The closing of the acquisition occurred simultaneous with the execution and delivery of the Purchase Agreement. At the closing, the parties also executed and delivered a royalty agreement (the "Royalty Agreement") pursuant to which we agreed to pay Sapir a royalty equal to 5% of the gross revenues realized from licenses or products generated or derived from the Business. Due to circumstances beyond the control of the parties, we were unable to develop the Business to the extent contemplated by (i) the Purchase Agreement and the Royalty Agreement (together, the "Sapir Agreements") and (ii) discussions that occurred between us and Sapir following the closing of the Purchase Agreement. As a result, onJune 6, 2022 , we entered into a rescission agreement with Sapir (the "Rescission Agreement") in order to rescind the Purchase Agreement and the Royalty Agreement and restore both us and Sapir to the respective positions we occupied immediately in advance of the execution and delivery of the Sapir Agreements.
As of the date of the Rescission Agreement, we had not completed the issuance of the Preferred Stock to Sapir or completed any payments to Sapir under the Royalty Agreement.
In connection with the Sapir transaction, onJanuary 14, 2022 , we entered into a settlement and termination agreement (the "Settlement Agreement") withLode Star Gold, Inc. , a privateNevada corporation and our former controlling shareholder ("LSG"), in order to terminate the mineral option agreement between the parties datedOctober 4, 2014 , as amended onOctober 31, 2019 (together, the "Option Agreement"). The Settlement Agreement provided for the immediate termination of the Option Agreement (with the exception of certain standard provisions that survived according to their terms); the forgiveness by LSG of all amounts owing by us to LSG thereunder, which includes approximately$2.224 million in accrued, unpaid penalty and other payments (collectively, the "Debt"); and the return to LSG of our 20% undivided interest in and to the mineral property that was the subject of the Option Agreement. OnJune 8, 2022 , and in connection with the rescission of the Sapir Agreements, we entered into a debt reinstatement agreement (the "Reinstatement Agreement") with LSG pursuant to which we agreed to reinstate the Debt. Also onJune 8, 2022 , we entered into debt conversion agreements with three related parties, including LSG, pursuant to which the creditors converted an aggregate of$2,601,207 in accrued, unpaid debt into 70,302,906 shares of our common stock at a price of$0.037 per share.
At present, the Company has no has no current business project and is actively seeking business opportunities.
Funding
At present, we have no sustainable financing in place other than remedial expenses still being advanced by LSG.
Personnel
We have no employees. Our President and CEO,
Our former CFO and Corporate Secretary,Samuel Sternheim , resigned effectiveSeptember 6, 2022 .Mark Walmesley has taken over his role as CFO, Secretary and Treasurer. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Going Concern There is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our expenses. This is because we have not generated any revenues to-date and we cannot currently estimate the timing of any possible future revenues. Our only source of cash at this time is from loans. Results of Operations The following summary of our results of operations should be read in conjunction with our financial statements for the period endedSeptember 30, 2022 which are included above in Part I, Item 1. Three Months Ended September 30 Change 2022 2021 Amount Percentage $ $ $ Revenue - - - - Operating Expenses 10,505 76,548 (66,043 ) (86%) Operating Loss (10,505 ) (76,548 ) (66,043 ) (86%) Other Income (Expense) (1,664 )
(25,341 ) (23,677 ) (93%)
(12,169 ) (101,889 ) (89,720 ) (88%)
Nine Months Ended September 30 Change
2022 2021 Amount Percentage
$ $ $
Revenue - - - -
Operating Expenses 143,398 263,466 120,068 (45%)
Operating Loss (143,398 ) (263,466 ) (120,068 ) (45%)
Other Income (Expense) 2,184,446
(72,348 ) 2,256,794 3019%
2,041,048 (355,814 ) 2,396,862 674%
Revenues
We had no operating revenues during the three month and nine month periods endedSeptember 30, 2022 and 2021. We had a net loss of$12,169 during the current quarter and recorded net income of$2,041,048 for the nine month period endedSeptember 30, 2022 , which was entirely attributable to the rescission of the Sapir transaction as described above. Expenses
Notable year over year differences in expenses for the third quarter in 2022 compared to 2021 are as follows:
Nine Months Ended September 30 Increase/(Decrease)
2022 2021 Amount Percentage
$ $ $
Consulting services 58,321 93,883 (35,562 ) (38 %)
Exploration and evaluation - 28,443 (28,443 ) (100 %)
Mineral option fees - 75,000 (75,000 ) (100 %)
Professional fees 52,719 35,715 17,004 48 %
Interest, bank and finance charges 2,471 72,348 (69,877 ) (97 %)
Consulting fees decreased during the nine month period endedSeptember 30, 2022 asMark Walmesley no longer provided strategic consulting services during the three months endedSeptember 30, 2022 ($25,000 per quarter in previous quarters). Exploration and evaluation expense and mineral option fees were reduced to $Nil in the nine month period endedSeptember 30, 2022 due to the Company terminating its mineral property option and no longer spending on mining efforts. 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Interest, bank and finance charges in the nine month period endedSeptember 30, 2022 decreased as the Company settled various interest bearing loans during
the period. Professional fees in the nine month period endedSeptember 30, 2022 included legal, audit and bookkeeping were increased as the Company paid its OTC Markets annual fee and continued to restructure itself following the rescinding of
the Sapir transaction.
Liquidity and Capital Resources
AtSeptember 30, 2022 , the Company's total assets were$4,484 and its total liabilities were$20,878 . The Company's working capital deficiency atSeptember 30, 2022 was$16,394 . ForDecember 31, 2021 the Company had a working capital deficiency of$225,586 . The Company has no current business project and no cash generating operations. Management is actively seeking business opportunities. Our primary source of funding is from loans advanced to us from our largest shareholder, LSG, and other related parties. Cash Flows Nine Months Ended September 30 Increase/(Decrease) 2022 2021 Amount Percentage $ $ $ Cash Flows Provided By (Used In): Operating Activities (61,112 ) (56,353 ) (4,759 ) (8 %) Financing Activities 59,315 55,000 4,315 8 % Net increase (decrease) in cash (1,797 ) (1,353
) (444 ) (33 %) We have yet to generate any revenues from our business operation and our ability to generate adequate amounts of cash to meet our needs is entirely dependent on the issuance of shares or loans, which have been our principal sources of working capital so far. For the foreseeable future, we will have to continue to rely on those sources for funding. We have no assurance that we can successfully engage in any further private sales of our securities or that we can obtain any additional loans.
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