We were incorporated under the laws of the State of Delaware as D3esports on May
1, 2018. We are 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. As a result of the Acquisition, we will continue
as a publicly traded company under the name StemGen, Inc. The existing business
operations of D3esports, Inc. will continue as our wholly 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 7,000,000 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").
On the 20th day of May 2019 we incorporated StemGen Connect in the State of
Texas and issued 1,000,000 shares (50%) of common stock to The Learning
Partnership.com Trading Limited, 500,000 shares (25%) of common stock to
D3esports Corp. and 500,000 shares (25%) of common stock to Dawson Racing, Inc.
D3esports Corp. is a wholly owned subsidiary of StemGen, Dawson Racing, Inc. is
an affiliate of Simon Dawson, the president and CEO of StemGen.
The Learning Partnership.com Trading Limited is a UK based company engaged in
educational leadership, teaching and learner engagement creating a social
learning platform division for education, www.DendriteConnect.com. Dendrite
Connect empowers students, teachers and parents around the globe to engage in
enrichment and collaboration learning environment, programs, challenges,
projects and careers. Dendrite Connect enables collaboration between its members
through content sharing, chat forums and networks of users and career
opportunities tailored to each member as they journey through education.
A joint venture agreement was entered into among the shareholders of StemGen
Connect to integrate the technologies from the three companies, into a single
virtual-to-real motorsports-based Science, Technology, Engineering and
Mathematics (STEM) enrichment and collaboration learning environment to drive
the launch of an esports competition for school networks and their students.
There has been no activity in this joint venture or StemGen Connect as of
September 30, 2019.
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 consolidated
financial statements are prepared. On a regular basis, we review our accounting
policies and how they are applied and disclosed in our consolidated financial
statements.
While we believe that the historical experience, current trends and other
factors considered support the preparation of our consolidated financial
statements in conformity with GAAP, actual results could differ from our
estimates and such differences could be material.
For a full description of our critical accounting policies, please refer to Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report for the year ended June 30, 2019 on Form 10-K.
- 13 -
--------------------------------------------------------------------------------
Results of Operations
Nine months ended March 31, 2020 and 2019
Revenue
We recognized revenue in the amount of $1,750 for the nine months ended March
31, 2020 compared to revenue of $12,058 during the comparable period of 2019.
Cost of Revenue
We recognized cost of revenues in the amount of $3,725 for the nine months ended
March 31, 2020 compared to $4,191 for the comparable period of 2019.
General and Administrative Expenses
We recognized general and administrative expenses in the amount of $38,992 for
the nine months ended March 31, 2020 compared to $155,372 for the comparable
period of 2019. The prior year expense included certain start-up expenses of the
Company which were non-recurring .
Interest Expense
We incurred interest expense of $105,600 for the nine months ended March 31,
2020 compared to $19,820 for the comparable period of 2019 and is primarily
related to statutory interest on convertible notes payable.
Loss on fair value of derivative
We recognized a loss on fair value of derivative of $17,182 for the nine months
ended March 31, 2020 based on the valuation of the derivatives compared to
$119,192 for the comparable period of 2019.
Net Loss
We incurred a net loss of $168,582 for the nine months ended March 31, 2020
compared to a loss of $306,517 for the comparable period of 2019 related to the
items discussed above.
Three months ended March 31, 2020 and 2019
Revenue
We recognized no revenue for the three months ended March 31, 2020 compared to
revenue of $2,058 during the comparable period of 2019.
General and Administrative Expenses
We recognized general and administrative expenses in the amount of $3,148 for
the three months ended March 31, 2020 compared to $51,459 for the comparable
period of 2019. The prior year expense included certain start-up expenses of the
Company which were not recurring.
Interest Expense
We incurred interest expense of $35,200 for the three months ended March 31,
2020 primarily related to statutory interest on convertible notes payable.
Loss on fair value of derivative
We recognized a loss on fair value of derivative of $5,717 for the three months
ended March 31, 2020 based on the valuation of the derivatives.
- 14 -
--------------------------------------------------------------------------------
Net Loss
We incurred a net loss $52,703 for the three months ended March 31, 2020
compared to a loss of $195,913 for the comparable period of 2019 related to the
items discussed above.
Liquidity and Capital Resources
At March 31, 2020, we had cash on hand of $11,739. The company has negative
working capital of $1,413,988 as of March 31, 2020. 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 obtain funds when we need them or that funds will be
available on terms that are acceptable to the Company.
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.
© Edgar Online, source Glimpses
STEMGEN, INC. 
