UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~December 3031, 2020

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 000-21555

StemGen, Inc.

(Exact name of registrant as specified in its charter)


Delaware		54-1812385
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

1 Performance Drive, Suite F Angleton, TX		77515
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (832) 954-7569

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [_] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [_] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	[_]	Accelerated filer	[_]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [_] Yes [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of ~~November~~February 1016, ~~2020~~2021, there were 45,670,063 shares of common stock issued and outstanding.

TABLE OF CONTENTS

		Page
Part I — Financial Information
Item 1.	Financial Statements.	4
	Consolidated Balance Sheets (Unaudited)	4
	Consolidated Statements of Operations (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)	6
	Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to the Unaudited Consolidated Financial Statements	8-12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	12-1314
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	1314
Item 4.	Controls and Procedures.	~~13-~~14
Part II — Other Information
Item 1.	Legal Proceedings.	1415
Item 1A.	Risk Factors.	1415
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	1415
Item 3.	Defaults upon Senior Securities.	1415
Item 4.	Mine Safety Disclosures.	1415
Item 5.	Other Information.	1415
Item 6.	Exhibits.	1415

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

When used in this report, the terms, “we,” the “Company,” “SGNI,” “our,” and “us” refers to StemGen, Inc., a Delaware corporation.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STEMGEN, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2020			June 30, 2020
	December 31, 2020			June 30, 2020
ASSETS
Current assets
Cash and cash equivalents	$	—4,318		$	236
Federal income tax receivable		10,000			10,000
Contract asset		—			18,800
Total current assets		1014,~~000~~318			29,036
Property and Equipment
Vehicles – race cars		~~580~~527,~~150~~650			387,450
Less accumulated depreciation and amortization		(3347,~~210~~555	)		(19,373	)
		546,940			368,077
		480,095			368,077
TOTAL ASSETS	$	~~556~~494,~~940~~413		$	397,113
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	~~182~~168,~~528~~911		$	195,460
Deferred revenue		1,500			25,500
Advances from shareholders		~~179~~204,070			129,267
Accrued interest payable		~~464~~499,~~629~~829			429,429
Convertible notes payable		563,203			563,203
Derivative liability		~~153~~159,~~555~~285			147,825
Total current liabilities		1,~~544~~596,~~485~~798			1,490,684
Commitments and contingencies
Stockholders’ Deficit
Preferred Stock; 8,000,000 shares authorized:
Series A Convertible Preferred Stock, par value $0.001; 6,000,000 shares issued and outstanding at September 30, 2020 and June 30, 2020; liquidation preference of $6,000,000		6,000			6,000
Series A Convertible Preferred Stock, par value $0.001; 6,000,000 shares issued and outstanding at December 31, 2020 and June 30, 2020; liquidation preference of $6,000,000		6,000			6,000
Series E Preferred Stock; par value $0.000001; 1,000,000 shares issued and outstanding at September 30, 2020 and June 30, 2020		1			1
Series E Preferred Stock; par value $0.000001; 1,000,000 shares issued and outstanding at December 31, 2020 and June 30, 2020		1			1
Series F Preferred Stock; par value $0.000001; 1,000,000 shares issued and outstanding at September 30, 2020 and June 30, 2020		1			1
Series F Preferred Stock; par value $0.000001; 1,000,000 shares issued and outstanding at December 31, 2020 and June 30, 2020		1			1
Common Stock; par value $0.001; 100,000,000 shares authorized, 45,670,063 and 45,429,188 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively		45,670			45,429
Common Stock; par value $0.001; 100,000,000 shares authorized, 45,670,063 and 45,429,188 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively		45,670			45,429
Additional paid-in capital (deficit)		(294,266	)		(486,725	)
Accumulated deficit		(~~744~~859,~~951~~791	)		(658,277	)
Total stockholders’ deficit		(~~987~~1,~~545~~102,385	)		(1,093,571	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	~~556~~494,~~940~~413		$	397,113

The accompanying notes are an integral part of these financial statements

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STEMGEN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended ~~September~~December 3031, 2020 and 2019

(Unaudited)

	Three Months Ended September 30,
	Six Months Ended December 31,						Three Months Ended December 31,
	2020			2019			2020			2019
Revenue	$	2439,000		$	—1,750		$	15,000		$	1,750
Operating expense:
Cost of revenue		2430,~~675~~326			—			5,651			—
Depreciation		1332,~~837~~682			—			18,845			—
General and administrative expenses		3170,~~232~~146			1335,~~181~~774			38,914			22,593
Loss from operations		(4594,~~744~~154	)		(1334,~~181~~024	)		(48,410	)		(20,843	)
Interest expense		(3570,~~200~~400	)		(3570,~~200~~400	)		(35,200	)		(35,200	)
Loss on fair value of derivative liability		(5,730	)		(5,731	)
Loss on sale of property and equipment		(25,500	)		—			(25,500	)		—
Net loss	$	(86,674	)	$	(54,112	)
Loss on fair value of derivative liability		(11,460	)		(11,455	)		(5,730	)		(5,724	)
Net loss per share – basic and diluted	$	(0.00	)	$	(0.00	)
Net loss	$	(201,514	)	$	(115,879	)	$	(114,840	)	$	(61,767	)
Weighted average number of common shares outstanding – basic and diluted		45,667,445			45,426,677
Net loss per share – basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding – basic and diluted		45,668,754			45,427,933			45,670,053			45,427,933

The accompanying notes are an integral part of these financial statements

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STEMGEN, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the ~~Three~~Six Months Ended ~~September~~December 3031, 2020 and 2019

(Unaudited)

	Series A Preferred Stock			Series E Preferred Stock			Series F Preferred Stock			Common Stock			Additional paid-in			Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital			Deficit			Total
Balance, June 30, 2020	6,000,000	$	6,000	1,000,000	$	1	1,000,000	$	1	45,429,188	$	45,429	$	(486,725	)	$	(658,277	)	$	(1,093,571	)
Common stock issued for vehicles	—		—	—		—	—		—	240,875		241		192,459			—			192,700
Net loss	—		—	—		—	—		—	—		—		—			(86,674	)		(86,674	)
Balance, September 30, 2020	6,000,000	$	6,000	1,000,000	$	1	1,000,000	$	1	45,670,063	$	45,670	$	(294,466	)	$	(744,951	)	$	(987,545	)
Net loss	—		—	—		—	—		—	—		—		—			(114,840	)		(114,840	)
Balance, December 31, 2020	6,000,000	$	6,000	1,000,000	$	1	1,000,000	$	1	45,670,063	$	45,670	$	(294,466	)	$	(859,791	)	$	(1,102,385	)

	Series A Preferred Stock			Series E Preferred Stock			Series F Preferred Stock			Common Stock			Additional paid-in			Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital			Deficit			Total
Balance, June 30, 2019	6,000,000	$	6,000	1,000,000	$	1	1,000,000	$	1	45,422,188	$	45,422	$	(493,718	)	$	(427,505	)	$	(869,799	)
Common stock issued for cash	—		—	—		—	—		—	7,000		7		6,993			—			7,000
Net loss	—		—	—		—	—		—	—		—		—			(54,112	)		(54,112	)
Balance, September 30, 2019	6,000,000	$	6,000	1,000,000	$	1	1,000,000	$	1	45,429,188	$	45,429	$	(486,725	)	$	(481,617	)	$	(916,911	)
Net loss	—		—	—		—	—		—	—		—		—			(61,767	)		(61,767	)
Balance, December 31, 2019	6,000,000	$	6,000	1,000,000	$	1	1,000,000	$	1	45,429,188	$	45,429	$	(486,725	)	$	(543,384	)	$	(978,678	)

The accompanying notes are an integral part of these financial statements

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STEMGEN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Three~~Six Months Ended ~~September~~December 3031, 2020 and 2019

(Unaudited)

	Three Months Ended September 30,
	Six Months Ended December 31,
	2020			2019
Cash flow from operating activities:
Net loss	$	(86201,~~674~~514	)	$	(54115,~~112~~879	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1332,~~837~~682			—
Change in fair value of derivative liability		511,~~730~~460			511,~~731~~455
Change in accrued interest payable		35,200			35,200
Loss on sale of property and equipment		25,500			—
Change in accrued interest payable		70,400			70,400
Change in contract assets		18,800			—
Change in deferred revenue		(24,000	)		—
Change in accounts payable and accrued liabilities		(1226,~~932~~549	)		(84,~~837~~253	)
Net cash used in operating activities		(5093,~~039~~221	)		(2229,~~018~~771	)
Cash flows from investing activities:
Proceeds from sale of property and equipment		22,500			—
Net cash provided by investing activities		22,500			—
Cash flows from financing activities:
Proceeds from sale of common stock		—			7,000
Proceeds from advances from shareholder		4974,803			—21,010
Net cash provided by financing activities		4974,803			728,~~000~~010
Net change in cash		~~(236~~4,082	)		(21,~~518~~761	)
Cash and equivalents, beginning of period		236			2,751
Cash and equivalents, end of period	$	—4,318		$	~~233~~990
Non-cash investing and financing activities:
Common stock issued for vehicles	$	192,700		$	—

The accompanying notes are an integral part of these financial statements

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STEMGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~December 3031, 2020

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business – We were incorporated under the laws of the State of Delaware, August 18, 1992. Prior to the Acquisition (as defined below), we were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). As a result of the Acquisition, we have ceased to be a “shell company” and 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 by and among (i) StemGen, Inc.(“StemGen”); (ii) D3esports, Inc., a Wyoming corporation (“D3esports”); (ii) and 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 6,000,000 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”).

D3esports was formed on May 1, 2018 and is 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.

Principles of Consolidation – The consolidated financial statements include the accounts of StemGen, and its wholly owned subsidiaries. All significant inter-company transactions and balances have been eliminated.

Interim Financial Statements – The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended June 30, 2020 and notes thereto and other pertinent information contained in our Form 10-K filed with the Securities and Exchange Commission (the “SEC”).

The results of operations for the ~~three~~six months ended ~~September~~December 3031, 2020 are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2021.

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and 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. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the financial statements.

Cash and Cash Equivalents – The Company considers all highly liquid debt instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.

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Improvements or betterments of a permanent nature are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains or losses resulting from property disposals are credited or charged to operations in the year of disposal.

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Income Taxes – The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Earnings (Loss) per Common Share – The Company computes basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no dilutive shares outstanding for any periods reported.

Derivative Instruments – Our debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For bifurcated conversion options that are accounted for as derivative instrument liabilities, we determine the fair value of these instruments using the Black-Scholes option pricing model. This model requires assumptions related to the remaining term of the instrument and risk-free rates of return, our current Common Stock price and expected dividend yield, and the expected volatility of our Common Stock price over the life of the option.

Financial Instruments – The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.

FASB Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


	Level 1 -	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

	Level 2 -	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

	Level 3 -	Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2020 and June 30, 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.

- 9 -

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2020 and June 30, 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.

Recently Adopted Accounting Pronouncements – In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires an entity to recognize lease liabilities and a right-of-use asset for all leases on the balance sheet and to disclose key information about the entity’s leasing arrangements. The Company adopted ASU 2016-02 with no impact on its financial position or results of operations.

NOTE 2 – GOING CONCERN

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the ~~three~~six months ended ~~September~~December 3031, 2020, the Company had a net loss of $86201,~~674~~514. As of ~~September~~December 3031, 2020, the Company had negative working capital of $1,~~534~~582,~~485~~480. Management does not anticipate having positive cash flow from operations in the near future.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company currently does not have the resources needed to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on increasing revenues and raising the funds necessary to fully 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 long term, management believes the Company’s projects and initiatives will be successful and will provide cash flow which will be used to finance the Company’s 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 debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.

NOTE 3 – COMMITMENTS

From time to time, we may be involved in litigation in the ordinary course of business. To our knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or any of our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

NOTE 4 – ~~EQUITY~~PROPERTY AND EQUIPMENT

~~During~~On ~~the~~October ~~three months ended September 30~~14, 2020, the Company ~~issued 240,875~~sold ~~shares~~one ofrace ~~common~~car ~~stock~~ for ~~the~~cash ~~purchase~~proceeds of ~~two race cars. The stock was valued at~~ $~~192~~22,~~700~~500 ~~based~~and onrecognized ~~the~~a ~~market~~loss ~~value~~ of ~~the~~ ~~stock on the date of the transaction~~$25,500.

~~During~~NOTE ~~the~~5 ~~three~~– ~~months ended September 30, 2019, the Company issued 7,000 shares of common stock and received cash proceeds of $7,000.~~EQUITY

During the six months ended December 31, 2020, the Company issued 240,875 shares of common stock for the purchase of two race cars. The stock was valued at $192,700 based on the market value of the stock on the date of the transaction.

During the six months ended September 30, 2019, the Company issued 7,000 shares of common stock and received cash proceeds of $7,000.

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NOTE 56 – CONVERTIBLE NOTES PAYABLE

Convertible notes payable consisted of the following at ~~September~~December 3031, 2020:


Convertible note issued March 31, 2015, maturing March 31, 2017, bearing interest at 10% per year, until maturity, then 25%. Convertible into common stock at a rate of $0.05 per share. In default as of April 1, 2017.	$	36,340
Convertible note in the original principal amount of $85,465, issued June 30, 2015 and maturing June 30, 2017, bearing interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of $0.05 per share. In default as of July 1, 2017.		85,465
Convertible note in the original principal amount of $277,208, issued September 30, 2015 and maturing September 30, 2018, bearing interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of $0.05 per share		277,208
Convertible note in the original principal amount of $103,072, issued December 31, 2015 and maturing December 31, 2018, bearing simple interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of $0.40 per share.		103,072
Convertible note in the original principal amount of $61,118, issued March 31, 2016 and maturing March 31, 2019, bearing simple interest at 10% per year until maturity and 25% thereafter, and convertible into common stock at a rate of a 60% discount to the volume weighted average price for the last five trading days prior to conversion.		61,118

Total convertible notes	$	563,203

Principal along with accrued interest are 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 4.9% of the outstanding stock of the Company. The notes are unsecured and are in default.

NOTE 67 – DERIVATIVE LIABILITY

The conversion feature of certain convertible notes payable was accounted for as a derivative liability. The derivative liability at ~~September~~December 3031, 2020, was calculated using the Black Scholes method over the expected terms of the convertible notes, with a risk-free rate of 1.60% and volatility of 200%.

During the ~~three~~six months ended ~~September~~December 3031, 2020, the Company recognized a loss of $511,~~730~~460 for the change in fair value of derivative.

NOTE 78 – RELATED PARTY

The Company has been provided warehouse, office space and other organizational expenses by its chief executive officer, Simon Dawson, for which $216,~~000~~100 and $17,500 was paid during the ~~three~~six month periods ended ~~September~~December 3031, 2020 and 2019, respectively.

As of ~~September~~December 3031, 2020 and June 30, 2020, the Company has $~~179~~204,070 and $129,267, respectively, in advances from a shareholder. The advances bear no interest and have no repayment terms.

During the ~~three~~six months ended ~~September~~December 3031, 2020, the Company received anadvances ~~advance~~ of $4974,803 from a shareholder. The advance bears no interest and has no repayment terms.

NOTE 89 – SUBSEQUENT EVENTS

~~Since~~Subsequent ~~September~~to 30December 31, 2020 ~~and through the date of this report~~, the entire global economy has been substantially impacted by the COVID-19 pandemic which began in China and has spread to the United States and most other parts of the world. The range of possible impacts on the Company’s ~~business~~received advances from ~~the~~shareholders ~~COVID-19~~totaling ~~pandemic could include~~$30, ~~but would not necessarily be limited to, one or more of the following factors:~~000.

Since December 31, 2020 and through the date of this report, the entire global economy has been substantially impacted by the COVID-19 pandemic which began in China and has spread to the United States and most other parts of the world. The range of possible impacts on the Company’s business from the COVID-19 pandemic could include, but would not necessarily be limited to, one or more of the following factors:


•	A negative impact due to the contraction in the sources of capital required to support our continued business strategic efforts.

•	A negative impact due to rising bottleneck in the supply chain of goods and services needed to pursue our business strategic effort.

•	A negative impact on our human capital resources needed in our business.

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At this time, the Company believes that it is premature to determine the potential impact on the Company’s business prospects from these or other factors that may be related to the COVID-19 pandemic.

On October 14, 2020, the Company sold one race car for cash of $22,500.

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

We were incorporated under the laws of the State of Delaware, August 18, 1992. Prior to the Acquisition (as defined below), we were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). As a result of the Acquisition, we have ceased to be a “shell company” and 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”).

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, 2020 on Form 10-K.

Results of Operations

~~Three~~Six months ended ~~September~~December 3031, 2020 and 2019

Revenue

We recognized revenue of $2439,000 for the ~~three~~six months ended ~~September~~December 3031, 2020 compared to no revenue of $1,750 during the comparable period of 2019. We expect our revenue to be intermittent in the near term.

Cost of Revenue

We incurred cost of revenue of $2430,~~675~~326 for the ~~three~~six months ended ~~September~~December 3031, 2020 related to the revenue generated in the period.

Depreciation

We incurred depreciation expense of $1332,~~837for~~682 for the ~~three~~six months ended ~~September~~December 3031, 2020.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $70,146 for the six months ended December 31, 2020 compared to $35,774 for the comparable period of 2019, related to higher equipment, professional and marketing expenses.

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Interest Expense

We incurred interest expense of $70,400 for both the six months ended December 31, 2020 and 2019 primarily related to statutory interest on convertible notes payable.

Loss on sale of property and equipment

We recognized a loss on sale of property and equipment of $25,500 for the six months ended December 31, 2020 related to the sale of one race car.

Loss on fair value of derivative

We recognized a loss on fair value of derivative of $11,460 for the six months ended December 31, 2020 compared to a loss of $11,455 during the comparable period of 2019 based on the valuation of the derivatives.

Net Loss

We incurred a net loss $201,514 for the six months ended December 31, 2020 compared to a loss of $115,879 for the comparable period of 2019 related to the items discussed above.

Three months ended December 31, 2020 and 2019

Revenue

We recognized revenue of $15,000 for the three months ended December 31, 2020 compared to revenue of $1,750 during the comparable period of 2019. We expect our revenue to be intermittent in the near term.

Cost of Revenue

We incurred cost of revenue of $5,651 for the three months ended December 31, 2020 related to the revenue generated in the period.

Depreciation

We incurred depreciation expense of $18,845 for the three months ended December 31, 2020.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $3138,~~232~~914 for the three months ended ~~September~~December 3031, 2020 compared to $1322,~~181~~593 for the comparable period of 2019, related to higher equipment, professional and marketing expenses.

Interest Expense

We incurred interest expense of $35,200 ~~and $35,200~~ for both the three months ended ~~September~~December 3031, 2020 and 2019, ~~respectively,~~ primarily related to statutory interest on convertible notes payable.

Loss on sale of property and equipment

We recognized a loss on sale of property and equipment of $25,500 for the three months ended December 31, 2020 related to the sale of one race car.

Loss on fair value of derivative

We recognized a loss on fair value of derivative of $5,730 for the three months ended ~~September~~December 3031, 2020 compared to a loss of $5,~~731~~724 during the comparable period of 2019 based on the valuation of the derivatives.

Net Loss

We incurred a net loss $86114,~~674~~840 for the three months ended ~~September~~December 3031, 2020 compared to a loss of $5461,~~112~~767 for the comparable period of 2019 related to the items discussed above.

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Liquidity and Capital Resources

At ~~September~~December 3031, 2020, we had cash on hand of $~~-nil-~~4,318 and negative working capital of $1,~~534~~582,~~485~~480. 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to a smaller reporting company.

Item 4. Controls and Procedures Management’s Report on Internal Control over Financial Reporting

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~September~~December 3031, 2020. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September~~December 3031, 2020, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

1. As of September 30, 2020, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.


	1.	As of December 31, 2020, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

	2.	As of December 31, 2020, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

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2. As of September 30, 2020, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Our management, including our principal executive officer and principal financial officer, who are the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Change in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

ITEM 1A. RISK FACTORS

Not applicable to a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has not defaulted upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable to the Company.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


3.1	Restated Certificate of Incorporation of StemGen, Inc. (1)
3.2	Bylaws of StemGen, Inc. (1)
31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and accounting officer (2)
32.1	Section 1350 Certification of principal executive officer and principal financial accounting officer (2)
101	XBRL Interactive Data files (3),(4)

__________


(1)	Incorporated by reference to the Company’s Form S-1 filed on March 17, 2015.
(2)	Filed or furnished herewith.
(3)	To be submitted by amendment.
(4)	In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	StemGen, Inc.
Date: November 16, 2020	By:	/s/ Simon Dawson
Date: February 16, 2021	By:	/s/ Simon Dawson
		Simon Dawson
		CEO and Chairman of the Board

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