| NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE
OF OPERATIONS Sunstock,
Inc. (“Sunstock” or “the Company”) was incorporated on July 23, 2012, as Sandgate Acquisition Corporation, under
the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and
acquisitions. In July 2013, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing
shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection
with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s
name from Sandgate Acquisition Corporation to Sunstock, Inc. On July 18, 2013, Jason Chang and Dr. Ramnik S Clair were named as directors
of the Company. On
October 22, 2018, Sunstock, Inc. acquired all assets and liabilities of Mom’s Silver Shop, Inc. (the “Retail Store”)
located in Sacramento, California. The
Company’s business plan includes the buying, selling and distribution of precious metals, primarily gold. The Company pursues a
“ground to coin” strategy, whereby it seeks to acquire mining assets as well as rights to purchase mining production and
to sell these metals primarily through retail channels including their own branded coins. The Company emphasizes investment in enduring
assets that we believe may provide ‘resource to retail’ conversion upside. Our goal is to provide our shareholders with an
exceptional opportunity to capture value in the precious metals sector without incurring many of the costs and risks associated with
actual mining operations. BASIS
OF PRESENTATION The
accompanying unaudited condensed and consolidated financial statements of Sunstock, Inc. were prepared in accordance with the instructions
to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with U.S. GAAP. The
accompanying condensed and consolidated balance sheet at December 31, 2023, has been derived from audited consolidated financial statements,
but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.
GAAP”). The accompanying unaudited condensed and consolidated financial statements as of June 30, 2024 and for the three and six
months ended June 30, 2024 and 2023, have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions
to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related
notes to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as
filed with the U.S. Securities and Exchange Commission (SEC). In the opinion of management, all material adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been made to the unaudited condensed and consolidated financial
statements. The unaudited condensed and consolidated financial statements include all material adjustments (consisting of all normal
accruals) necessary to make the condensed and consolidated financial statements not misleading as required by Regulation S-X Rule 10-01.
Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected
for the year ended December 31, 2024 or any future periods. USE
OF ESTIMATES The
preparation of the unaudited condensed and consolidated financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates made by the Company’s management include realizability and valuation of inventories
and value of stock-based transactions. CONCENTRATION
OF RISK Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its
cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation
limit as of June 30, 2024 and December 31, 2023. CASH
AND CASH EQUIVALENTS The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. INVENTORIES INVENTORY
- COINS The
Company acquires collectible coins from both companies and individuals and then marks them up for resale. The inventory is recorded at
lower of cost or market or net realizable value. Inventory can fluctuate in relation to when it is purchased and when it is sold. Collectible
coins inventory was $ 1,462,705 1,272,999 At
each balance sheet date, the Company evaluates its ending inventory quantities on hand and on order and records a provision for excess
quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory
on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable
value. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory.
Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs
are considered permanent adjustments to the cost basis of the excess or obsolete inventories. INVENTORY
– PRECIOUS METALS Inventories
of precious metals and coins held for investment at June 30, 2024 include $ 994,658 814,574 INVENTORY
– PRECIOUS METALS (CONTINUED) The
change in fair value of the precious metals was included in the financial statements herein as recorded on the Company’s Statements
of Operations as an unrealized gain in precious metal of $ 131,920 40,051 180,084 25,976 PROPERTY
AND EQUIPMENT Property
and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 5 LONG-LIVED
ASSETS The
Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition
is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related asset.
No REVENUE
RECOGNITION The
Company’s principal activities from which it generates revenue are product sales. Revenue is measured based on considerations specified
in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. These contracts define
each party’s rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid at time
of sale via credit card, check, or cash when products are sold direct to consumers. A
performance obligation is a promise in a contract to transfer a distinct product to the customer, which for the Company is transfer of
a product to customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to
the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods
is separately identifiable from other promises in the contract. The Company has concluded the sale of product and related shipping and
handling are accounted for as the single performance obligation. The
transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer
receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which the Company
will be entitled to receive in exchange for transferring goods to the customer. We do not issue refunds. The
Company recognizes revenue when it satisfies a performance obligation in a contract by transferring control over a product to a customer
when product is shipped based on fulfillment by the Company or when a point-of-sale transaction is completed. Taxes assessed by a governmental
authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from
a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has
transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales. The Company does not accept
returns. INCOME
TAXES The
Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined
based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation
allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred
tax assets. The Company’s income tax provision consists of state minimum taxes. The
Company recognizes any uncertain income tax positions on income tax returns at the largest amount that is more-likely-than-not to be
sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a
50% likelihood of being sustained. There
are no unrecognized tax benefits included in the balance sheet that would, if recognized, affect the effective tax rate. The
Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had
$ 0 INCOME
(LOSS) PER COMMON SHARE Basic
income (loss) per share represents income (loss) available to common stockholders divided by the weighted-average number of common shares
outstanding during the period. Diluted income (loss) per share reflects additional common shares that would have been outstanding if
dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance.
The Company had no potential common shares as of June 30, 2024 and June 30, 2023. FAIR
VALUE OF FINANCIAL INSTRUMENTS The
Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality
and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified
and disclosed in one of the following three categories: Level
1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level
2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar
assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities; and Level
3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
or liabilities, such as derivative liabilities in relation to the conversion feature of notes payable. At
June 30, 2024 and December 31, 2023, the Company’s financial instruments include cash, precious metals inventory, coins inventory,
SBA loan, and accounts payable and accrued expenses. The carrying amount of cash, precious metals inventory, coins inventory, SBA loan,
and accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. Inventory –
precious metals is at fair value measured under the Level 1 category. PRINCIPLES
OF CONSOLIDATION We
consolidate entities that we control due to ownership of a majority voting interest. All intercompany balances and transactions have
been eliminated in consolidation. |
