The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial condition of Spirits Time International, Inc. for the years ended December 31, 2020 and 2019.

The Report of Independent Registered Public Accounting Firm on the Company's 2020 audited financial statements addresses an uncertainty about the Company's ability to continue as a going concern, indicating that the Company has incurred losses since its inception and has no on-going operations. The report further indicates that these factors raise substantial doubt about the Company's ability to continue as a going concern. At December 31, 2020, the Company had a working capital deficit of $814,238 and a stockholders' deficit of $539,238. The Company incurred net losses of $164,621 and $295,395 for its fiscal years ended December 31, 2020 and 2019, respectively. Our primary creditor has claimed a default under the Promissory Note we issued to such creditor. The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing and there can be no assurance that it will be able to obtain the additional debt or equity capital required to continue its operations.

Critical Accounting Policies

The preparation of our financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. There have been no material changes to these policies during fiscal 2020 and 2019. As of December 31, 2020, the Company has not identified any critical estimates that are used in the preparation of the financial statements.

Liquidity and Capital Resources. As of December 31, 2020, we had cash of $342 and a negative working capital of $814,238. This compares with cash of $163 and negative working capital of $649,617 as of December 31, 2019.

Net cash used by operating activities totaled $40,371 for the year-ended December 31, 2020 consisting of a loss from operations of $164,621 which was offset by a change in accounts payable and accrued expenses of $97,901 and a change in accrued interest - related parties of $26,349. This compares with net cash used by operating activities totaled $103,761 for the year-ended December 31, 2019 consisting of a loss from operations of $295,395 which was offset by stock-based compensation of $15,000, amortization of debt discount of $17,812, loss on impairment of prepaid inventory of $69,530, a change in inventory of $66, a change in accounts payable and accrued expenses of $78,287 and a change in accrued interest - related parties of $10,939.

There were no investing activities for the years ended December 31, 2020 and 2019.

Net cash provided by financing activities totaled $40,550 for the year-ended December 31, 2020 consisting of proceeds from loans payable - related parties of $35,550 and proceeds from notes payable of $5,000. This compares with net cash used by financing activities totaled $17,815 for the year-ended December 31, 2019 consisting of proceeds from loans payable - related parties of $9,750, payments on loans payable - related parties of $17,565 and payments on notes payable of $10,000.

In September 2018, we obtained funds from the issuance of a Secured Promissory Note that is described in the Notes to the Financial Statements. Our net proceeds from that transaction have been used to repay outstanding debt, to fund the professional fees in connection with such transaction and the Asset Acquisition Transaction, for use in our beverage operations and for working capital.

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

We must secure additional funds in order to continue our business. There is no guarantee we will receive the required financing to complete our business strategies; we cannot provide any assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. If we are unable to accomplish raising adequate funds then any it would be likely that any investment made into the Company would be lost in its entirety.

Results of Operations. We did not have revenue for either the year-ended December 31, 2020 or 2019. For the year-ended December 31, 2020, we incurred professional fees of $47,740. For the year-ended December 31, 2019, we incurred professional fees of $111,654, which includes stock-based compensation of $15,000. The decrease in professional fees is mainly the result of legal and accounting fees incurred during the year ended December 31, 2019 associated with the Asset Acquisition described in ITEM 1 above and the convertible promissory note


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described in the Notes to the Financial Statements below. For the year-ended December 31, 2020, we incurred $9,096 of administrative expenses compared to $26,199 for the year-ended December 31, 2019. The decrease in administrative expenses is due primarily to significant marketing and travel fees incurred during the year ended December 31, 2019 related to the Asset Acquisition. For the year-ended December 31, 2020 we incurred interest expense of $107,785. For the year-ended December 31, 2019 we recorded an impairment loss on prepaid inventory of $69,530 and we incurred interest expense of $88,012 which includes the amortization of debt discount of $17,812.

As a result of the foregoing, we incurred a loss of $164,621 for the year-ended December 31, 2020 compared to a loss of $295,395 for the year-ended December 31, 2019. Since incorporation we have incurred a loss of $1,488,654.

Off-Balance Sheet Arrangements. None





Contractual Obligations.  None

Recent Accounting Pronouncements

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2020 and 2019.

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