Recently Issued Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

Note 3. Convertible Notes Payable

Convertible notes payable consisted of the following at June 30,December 31, 2021 and September 30, 2020:2021:

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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 4.99% of the outstanding stock of the Company.

During the three months ended December 31, 2020, the Company recognized $3,000 of deferred finance costs from its new convertible note payable and $30,000 of new discount related to the beneficial conversion features of convertible notes payable. During the three months ended MarchDecember 31, 2021, the Company recognized $7,000 of deferred finance costs from its new convertible note payable and $100,000 of new discount related to the beneficial conversion features of convertible notes payable. During the three months ended June 30, 2021, the Company recognized $7,000 of deferred finance costs from its new convertible note payable and $30,000 of new discount related to the beneficial conversion features of convertible notes payable.

During the three and nine months ended June 30, 2021, the Company recognized interest expense on convertible notes of $2,225 and $10,931 and amortization of discount on convertible notes payable of $32,452 and $201,636, respectively. During the three and nine months ended June 30, 2020, the Company recognized interest expense on convertible notes of $7,7542,854 and $17,561, and amortization of discount of $39,88761,188 and $185,395, respectively..

As of June 30,December 31, 2021 and September 30, 2020,2021, accrued interest on convertible notes payable was $226,123222,287 and $227,372, respectively.

Advances

As of June 30,December 31, 2021 and September 30, 2020,2021, the Company had non-interest bearing advances payable to third parties of $59,650. These advances are payable on demand.

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Note 4. Related Party Transactions

In January 2021, the Company’s former Chief Executive Officer Sydney Jim agreed to forgive all accrued but unpaid compensation of $38,130, resulting in a gain on settlement of liabilities to the Company that was recorded to additional paid in capital.

In March 2021, the Company entered into severance agreement with its former CEO Alex Blankenship. The Company owed Ms. Blankenship unpaid compensation of $130,000 and agreed to issue 8,600,000 shares of common stock in full settlement of this amount and release from the employment agreement with her. The shares had a fair value of $447,200 based on the stock price at the date of the agreement. The Company recognized a loss on settlement of $317,200 in connection with this agreement. As of March 31, 2021, 2,600,000 of the shares were issued to Ms. Blankenship. Concurrently with the severance agreement, the Company agreed to purchase the 1,000,000 shares Series E Preferred Stock held by Ms. Blankenship for $325,000 in cash. The Company reissued those Series E preferred Shares to the Company’s new CEO James Katzaroff. The Company recognized stock-based compensation of $325,000 related to this reissuance.

As of December 31, 2021 and September 30, 2021, the Company owed $David Summers, a significant shareholder119,655 and 161,655 to officers of the Company formerly provided consulting servicesfor compensation, respectively.

During the year ended September 30, 2021, the Company issued 5,000,000 shares of common stock to the Companyits CFO Robert Chicoski, with a fair value of $75,000 as a finder’s fee related to the development of our products. In addition, the Company had previously rented office space from Mr. Summers for $400 per month under a month to month lease. As part of the legal settlement discussed in Note 6 in October 2019, the Company was relieved of these outstanding claims, and the unpaid liability balance of $112,804 was retired as contributed capital, and Mr. Summers returned 5,800,000 shares of Series A Preferred stock with a book value of $4,590,535, which were cancelled.Company’s license agreement.

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Note 5. Stockholders’ Equity (Deficit)

Preferred Stock

Series A Preferred Stock – Our board of directors has designated up to 6,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock has a liquidation value of $2.00 per share. The initial number issued is 5,000,000 with additional shares to be issued as a dividend not to exceed a total of 6,000,000 shares. The rank of the Series A is prior to all common and preferred shares. In addition, the Series A Preferred Stock retains protective provisions to maintain their seniority with respect to liquidation or dissolution. The Series A Preferred Stock holds no voting rights and earns an 8% per annum dividend, payable in additional shares of Series A Preferred Stock. At December 31, 2021 and September 30, 2021, there were 0 shares of our Series A Preferred Stock outstanding, respectively.

Series B Preferred Stock – Our board of directors has designated up to 1,000,000 shares of Series B Preferred Stock. The Series B Preferred Stock has a liquidation value of $1.00 per share. The holders of the Series B Preferred Stock are entitled to dividends of 8% per year payable quarterly in cash or in shares of common stock at the option of the Company. The holders of the Series B Preferred Stock have no voting rights. The Series B Preferred Stock is redeemable at the option of the Company at a price of $1.00 per share. At December 31, 2021 and September 30, 2021, there were 0 shares of our Series B Preferred Stock outstanding.

Series C Preferred Stock – On September 12, 2017, our board of directors designated up to 1,200,000 shares of Series C Preferred Stock with a liquidation value of $0.50 per share. The holders of the Series C Preferred Stock have no voting rights. The Series C Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of one share of common stock for each share of Series C Preferred Stock. The Series C Preferred Stock is redeemable at the option of the Company at a price of $0.50 per share. The Series C Preferred Stock has been canceled, and there are 0 shares of Series C Preferred Stock outstanding as of December 31, 2021 and September 30, 2021.

Series D Preferred Stock – On September 21, 2017, our board of directors designated up to 539,988 shares of Series D Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series D Preferred Stock have no voting rights. The Series D Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $0.01 per share of common stock. The Series D Preferred Stock is not redeemable. During the three monthsyear ended December 31,September 30, 2019, the Company entered into a settlement agreement with David Summers,holders of 60,000 shares of the Company’s former CEO and a common stockholder. As part of this settlement, David SummersSeries D Preferred stock returned 5,800,000 Series A preferredthese shares to the Company which were cancelled. See Note 6 for additional information regarding the settlement.

Preferred Series E

On Marchcancellation. There was no gain or loss recognized on this transaction. At December 31, 2021 The Company agreed to repurchaseand September 30, 2021, there were 509,988 shares of Series D Preferred Stock outstanding.

Series E Preferred Stock – On August 3, 2015, our board of directors designated 1,000,000 shares of Series E Preferred Stock from Alex Blankenship, the Company’s former CEO, for $325,000. The Company then reissued those shares to James Katzaroff, the Company’s new CEO, and recognized stock-based compensation expense of $325,000.stock. The Series E Preferred stock has voting rights on the basis of two votes for every outstanding share ofis subordinate to our common stock meaning that the holders of thestock. It does not receive dividends and does not participate in equity distributions. The Series E Preferred Stock havestock retained 2/3 of the voting rights in the Company.

At December 31, 2021 and September 30, 2021, there were Common1,000,000 shares of Series E Preferred stock outstanding. Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purposes.

Series F Preferred Stock – On September 21, 2017, our board of directors designated up to 501,975 shares of Series F Preferred Stock Unitswith a liquidation value of $1.00 per share. The holders of the Series F Preferred Stock have no voting rights. The Series F Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $0.01 per share of common stock. The Series F Preferred Stock is not redeemable. During the year ended September 30, 2019, 60,000 shares of the Series F Preferred Stock were returned for cancellation. On November 5, 2021, a holder of Series F Preferred Stock converted 128,991 shares of Series F into 12,899,100 shares of common stock of the Company in accordance with the terms of the Series F. At December 31, 2021 and September 30, 2021, 257,984 and 386,975 shares of the Series F Preferred Stock were issued and outstanding, respectively.

Series G Preferred Stock - On August 11, 2021, our board of directors designated up to 1,000,000 shares of Series G Preferred Stock with a liquidation value of $1.00 per share. The holders of the Series G Preferred Stock have no voting rights except on matters related specifically to the Series G Preferred Stock. The Series G Preferred Stock carries a dividend of 8% of the stated value per share, which is cumulative and payable upon redemption, liquidation or conversion, and increases to 22% in case of default. The Series G Preferred Stock and accrued dividends are convertible beginning 180 days from issuance at the option of the holder into shares of common stock at a rate of a conversion price of 75% of the average three lowest trading prices during the 15 days prior to conversion. The Company will be required to redeem the Series G Preferred Stock upon the earlier of 15 months from issuance date or upon on event of default as defined in the agreement.

Based on the economic characteristics of the Series G Preferred Stock, the Company determined that the Series G should be accounted for as a liability under ASC 480-10, based on the discounted conversion price providing an effectively fixed monetary amount that the preferred stock is convertible into.

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During the three months ended MarchDecember 31, 2021, the Company sold common stock units to investors. Each unit consistan aggregate of 400,000171,875 shares of common stock and 600,000 warrants to purchase common stockSeries G Preferred Stock for three years at an exercise price of $0.03 per share. The Company receivednet cash proceeds of $499,500145,000. The Company recorded a debt discount of $26,875 for the difference between the cash proceeds and the total amount to be redeemed by the holder of $171,875. The Company amortized $15,753 of discount related to Series G Preferred Stock for the issuance of 19,980,000 shares of common stock and 29,970,000 warrants. No shares of common stock were issued as of Marchthree months ended December 31, 2021. The warrantsdividends on the Series G Preferred Stock are accrued as interest. The Company recognized $4,334 of interest on the Series G Preferred Stock and had a relative fair valuean accrued interest balance of $$5,615 and $1,281 as of December 31, 2021 and September 30, 2021, respectively.

At December 31, 2021, 350,462265,375 based on a Black-Scholes pricing model with estimated volatility ranging from 261.3% to 261.8%, dividend yieldshares of 0%, expected term of three yearsthe Series G Preferred Stock were issued and a risk free rate ranging from 0.19% to 0.24%.outstanding.

Common stock issued for conversion of convertible notes payable

During the three months ended December 31, 2020, the Company issued 19,269,286 shares of common stock upon the conversion of principal of $61,000$61,000 and accrued interest of $3,660. There was no gain or loss recognized as the conversion occurred in accordance with the original terms of the agreement.

During There were no conversions of convertible notes during the three months ended MarchDecember 31, 2021.

Common stock issued for stock payable

In December 2021, the Company issued 17,551,147issue 19,980,000 shares of common stock upon the conversion of principal of $109,000 and accrued interest of $6,540. There was no gain or loss recognized as the conversion occurred in accordance with the original termspart of the agreement.common stock unit sales that occurred during the year ended September 30, 2021. No shares are remaining to be issued for these unit sales.

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DuringThe following table summarizes the stock warrant activity for the three months ended June 30,December 31, 2021:

As of December 31, 2021, the Companyall outstanding warrants had an expected remaining life of 2.1 years and have no intrinsic value.

Common stock issued 1,193,857 sharesfor settlement of common stock upon the conversion of principal of $30,000 and accrued interest of $1,980. There was no gain or loss recognized as the conversion occurred in accordance with the original terms of the agreement.liabilities

During the three months ended December 31, 2019,2021, the Company issued 39,833,7496,000,000 shares of common stock uponand 900,000 warrants for the conversionsettlement of principalliabilities totaling $15,000. The Company recorded a $146,460 loss on settlement of $80,000 and accrued interest of $4,800. There was no gain or loss recognized as the conversion occurred in accordance with the original terms of the agreement.liabilities related to this transaction.

During the three months ended March 31, 2020, the Company issued 93,977,186 shares of common stock upon the conversion of principal of $66,000 and accrued interest of $3,960. There was no gain or loss recognized as the conversion occurred in accordance with the original terms of the agreement.

During the three months ended June 30, 2020, the Company issued 78,841,942 shares of common stock upon the conversion of principal of $35,000 and accrued interest of $2,100. There was no gain or loss recognized as the conversion occurred in accordance with the original terms of the agreement.

Common Stock Options

During the three months ended June 30, 2021, the Board of Directors approved grants of 70,000,000 options to officers and medical advisory board members. The stock options have an exercise price of $0.003 per share and are exercisable through the latter of two years from the effective date or two years after certain liquidity events. The total fair value of these option grants at issuance was $4,209,179. All options vested immediately. The Company estimated the fair value of the stock options using a black-scholes option pricing mode and the following assumptions: 1) expected term of 1 to 2 years; 2) volatility of 253.3% and 262.8%; 3) dividend yield of 0%; and 4) risk-free rate of between 0.35% and 0.36%.

The following table summarizes the stock option activity for the ninethree months ended June 30,December 31, 2021:

As of June 30, 2021, the aggregate intrinsic value of options vested and outstanding were $1,925,000. As of June 30,December 31, 2021, all outstanding options had an expected remaining life of 1.861.35 years and have 0. intrinsic value.

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Beneficial conversion feature

During the ninethree months ended June 30, 2021,December 31, 2020, the Company charged to additional paid-in capital the aggregate amount of $160,000$30,000 on connection with the beneficial conversion feature of notes payable.

Note 6. Commitments and Contingent Liabilities

Litigation

The Company was involved in a legal dispute with Mr. David Summers, a significant shareholder, regarding the settlement of claims on certain patents and formulas. In October 2019, the Company entered into a settlement agreement with David Summers whereby all claims, disputes and litigation were dismissed. Mr. Summers returned 5,800,000 shares of Series A Preferred stock to the Company, which were cancelled. The Company was relieved of the previously recognized liability for compensation amounts due to Mr. Summers of $112,804. The Company assigned three patents that it previously held to David Summers, which had no book value as of the date of the settlement. The settlement was recorded as a capital transaction due to the related party nature and as such no gain or loss was recorded.

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Note 7.6. License Agreement

Effective August 23, 2020 the Company’s wholly-owned subsidiary, SomaCeuticals, Inc. entered into an exclusive global license agreement with 7 to Stand, Inc. for the rights to U.S. patent 10,610,592 issued to Fabrizio de Silvestri, Terni, Italy, as inventor, April 7, 2020 for treatment of Multiple Sclerosis. In consideration for the license agreement, SomaCeuticals agreed to pay 7 to Stand a royalty of 7.1% of the net sales of any product developed under the patent on a worldwide basis. Additionally, the Company will issue a total of 116,520,667 shares of common stock to 7 to Stand upon completion of the following milestones:

Note 8.7. Subsequent Events

Subsequent to June 30, 2021,In February 2022, the Company issued a total of 2,802,760sold 59,125 shares of common stock related to the conversionSeries G Preferred Stock for net cash proceeds of $72,000 in principal and $4,320 of outstanding convertible debt.$50,000.

In July 2021, the Company issued 8,600,000 shares of common stock to its former CEO pursuant to the severance agreement.

In July 2021, the Company issued 58,260,334 shares of common stock pursuant to the first two milestones under the license agreement with 7 to Stand, Inc. 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, SomaCeuticals^TM

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 equity and 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.

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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,December 31, 2021 Compared to the Three Months Ended June 30,December 31, 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$166,294 for the three months ended June 30,December 31, 2021 compared to $48,563$60,353 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.legal expenses, advertising and marketing expenses.

Loss on settlement of liabilities. We recognized $5,438 and $0a loss on the settlement of liabilities in the amount of $146,460 during the three months ended June 30,December 31, 2021 andwith no such loss during the three months ended December 31, 2020. The loss was related to the severance agreement with Alex Blankenship, our former CEO.issuance of 6,000,0000 shares of common stock and 900,000 warrants for the settlement of liabilities totaling $15,000.

Interest expense. We recognized interest expense of $34,949$20,087 for the three months ended June 30,December 31, 2021 compared to $39,422$64,042 for the comparable period of 2020, including amortization of the discount on convertible notes payableSeries G Preferred Stock of $32,452$15,753 and $37,247$61,188 during the three months ended June 30,December 31, 2021 and 2020, respectively.