To The Stars Academy of Arts & Science 253G2 Offering circular supplement

Filed pursuant to Rule 253(g)(2)
File No. 024-10946

To The Stars Academy of Arts and Science Inc.

 

EXPLANATORY NOTE

This Supplement to the Offering Circular should be read in conjunction with the Offering Circular dated March 30, 2020 and is qualified by reference to the Offering Circular except to the extent that the information contained herein supplements the information contained in the Offering Circular.

The Offering Circular is available here: https://www.sec.gov/Archives/edgar/data/1710274/000110465920040685/tm208241d1_253g2.htm

SUPPLEMENT TO OFFERING CIRCULAR DATED MARCH 30, 2020

THIS SUPPLEMENT IS DATED APRIL 28, 2020

To The Stars Academy of Arts and Science Inc. (the “Company”) will not be able to meet the filing deadline, April 29, 2020, for its annual on Form 1-K due to circumstances related to COVID-19. As a result, the Company intends to take advantage of relief afforded under Rule 257(f) of the Securities Act to file its 1-K as soon as possible prior to June 13, 2020.

Set forth below is the preliminary unaudited 2019 consolidated financial information for the Company and its subsidiaries. The following information includes preliminary data and financial information with respect to the Company’s results for 2019. This information has not been audited or reviewed, and, when such audit or review takes place, we may need to make adjustments, which may be significant. Additionally, these preliminary results do not include footnotes which are an essential part of any complete financial statement. 

TO THE STARS ACADEMY OF ARTS AND SCIENCE INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2019 AND 2018

	2019			2018
Assets
Current assets
Cash	$	78,096		$	107,041
Accounts receivable, net		81,085			41,204
Inventory		146,170			120,148
Prepaid author royalties		56,757			52,628
Other current assets		4,750			12,185
Total Current Assets		366,858			333,206
Prepaid author royalties, net of current portion		115,234			105,892
Property and equipment, net		194,507			259,124
Media assets, net		136,013			199,665
Other Assets		7,500			7,500
R&D Materials		32,000			-
Total assets	$	852,112		$	905,387
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable	$	299,385		$	189,109
Revolving line of credit due related party		463,837			335,000
Amounts due related party		327,234			204,240
Accrued liabilities		86,807			72,021
Short-term loans and advances		240,186			87,604
Capital lease obligations		-			11,056
Total current liabilities		1,417,449			899,030
Noncurrent liabilities
Amounts due related party		161,446			148,908
Related party notes payable		-			600,000
Total liabilities		1,578,895			1,647,938
Commitments and contingencies (Note 5)
Stockholders' Deficit:
Preferred stock, $0.0001 par value; 91,000 shares authorized; no shares issued and outstanding as of December 31, 2019 and 2018		-			-
Class A common stock, par value $0.0001; 100,000,000 shares authorized; 13,022,477 and 70,544.879 shares issued and outstanding as of December 31, 2019 and 2018, respectively		1,257			7,054
Class B common stock, par value $0.0001; 9,000 shares authorized; 5,400 shares issued and outstanding as of December 31, 2019 and 2018		1			1
Additional paid-in capital		48,632,803			41,689,412
Accumulated deficit		(49,360,844	)		(42,439,018	)
Total Stockholders' Deficit		(726,783	)		(742,551	)
Total Liabilities & Stockholders' Deficit	$	852,112		$	905,387

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TO THE STARS ACADEMY OF ARTS AND SCIENCE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	2019			2018
Revenues	$	1,198,627		$	902,048
Cost of revenues		531,533			514,564
Gross profit		667,094			387,484
Operating expenses:
General and administrative		616,733			820,732
Sales and marketing		612,860			545,458
Research and development		155,085			226,681
Stock-based compensation		5,922,445			9,165,417
Depreciation and amortization		166,226			182,534
Total operating expenses		7,473,349			10,940,822
Operating loss		(6,806,255	)		(10,553,338	)
Other expenses:
Interest expense		113,140			103,957
Total other expenses		113,140			103,957
Loss before provision for income taxes		(6,919,395	)		(10,657,295	)
Provision for income taxes		2,431			3,200
Net loss	$	(6,921,826	)	$	(10,660,495	)
Net loss per share: basic and diluted	$	(0.24	)	$	(0.15	)
Weighted average number of shares outstanding: basic and diluted		28,835,181			69,465,637

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TO THE STARS ACADEMY OF ARTS AND SCIENCE INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	Common Stock						Common Stock
	Shares			Amount			Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholder's Equity (Deficit)
Balance at December 31, 2017		70,000,000		$	7,000			5,400	$	1	$	31,595,793	$	(31,778,523	)	$	(175,729	)
Proceeds from Regulation A offering, net		274,046			27			-		-		927,417		-			927,444
Stock-based compensation		-			-			-		-		9,165,417		-			9,165,417
Proceeds from stock option exercise		270,833			27			-		-		785		-			812
Net loss		-			-			-		-		-		(10,660,495	)		(10,660,495	)
Balance at December 31, 2018		70,544,879			7,054			5,400	$	1		41,689,412		(42,439,018	)		(742,551	)
Proceeds from Regulation A offering, net		95,021			-			-		-		335,809		-			335,809
Rescission & relinquishment of issued shares		(58,174,203	)		(5,797	)		-		-		5,797		-			-
Stock-based compensation		-			-			-		-		5,922,445		-			5,922,445
Contributed Capital - debt forgiveness by related party		-			-			-		-		679,123		-			679,123
Issuance of shares to co-founder & advisor		400,000			-			-		-		-		-			-
Proceeds from stock option exercise		156,780			-			-		-		217		-			217
Net loss		-			-			-		-		-		(6,921,826	)		(6,921,826	)
Balance at December 31, 2019		13,022,477		$	1,257			5,400	$	1	$	48,632,803	$	(49,360,844	)	$	(726,783	)

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TO THE STARS ACADEMY OF ARTS AND SCIENCE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,921,826	)	$	(10,660,495	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation		79,106			78,938
Amortization		87,120			103,596
Stock-based compensation		5,922,445			9,165,417
Changes in operating assets and liabilities:
Accounts receivable, net		(39,881	)		12,470
Inventory		(26,022	)		7,268
Prepaid author royalties		(4,129	)		(39,334	)
Other current assets		7,435			(8,404	)
Accounts payable		110,276			(205,223	)
Accrued liabilities		14,786			123,154
Net cash used in operating activities		(770,690	)		(1,422,613	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(14,489	)		(6,459	)
Purchase of media assets		(23,468	)		(37,763	)
Other, net		(41,342	)		-
Net cash used in investing activities		(79,299	)		(44,222	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Regulation A offering		477,141			1,292,604
Regulation A offering costs		(141,332	)		(120,997	)
Proceeds from short-term loans & advances, net		152,582			3,404
Principal payments on capital leases		(11,056	)		(29,076	)
Proceeds from related party revolving line of credit, borrowings and advance		343,492			356,785
Proceeds from stock option exercise		217			812
Net cash provided by financing activities		821,044			1,503,532
Increase (decrease) in cash and cash equivalents		(28,945	)		36,697
Cash and cash equivalents, beginning of year		107,041			70,344
Cash and cash equivalents, end of year	$	78,096		$	107,041
Supplemental disclosures of cash flow information:
Cash paid for interest	$	24,022		$	63,717
Cash paid for income taxes	$	3,200		$	3,200
Non cash investing and financing activities:
Reclass of related party note payable and  accrued interest to contributed capital	$	679,123		$	-

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