Life
Clips, Inc. and Subsidary
Statement
of Cash Flows
For
the Six Months Ended
(Unaudited)
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net gain/(loss)
|
|
$
|
(3,280,722
|
)
|
|
$
|
3,537,865
|
|
Common Stock Compensation
|
|
|
5,400
|
|
|
|
1,634,758
|
|
Accounts Receivable
|
|
|
3,064
|
|
|
|
(5,486
|
)
|
Inventory
|
|
|
-
|
|
|
|
(29,705
|
)
|
Deposit
|
|
|
-
|
|
|
|
240,000
|
|
Other Current Assets
|
|
|
-
|
|
|
|
(8,128
|
)
|
Changes in derivative liabilities
|
|
|
1,857,855
|
|
|
|
(13,157,878
|
)
|
Amortization of Debt discount
|
|
|
811,055
|
|
|
|
1,131,979
|
|
Loss on Batterfly acquisition
|
|
|
-
|
|
|
|
6,191,000
|
|
Adjustments to reconcile Net Income to Net Cash provided by operations:
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
|
218,070
|
|
|
|
63,604
|
|
Accrued expense and interest payable
|
|
|
216,751
|
|
|
|
(516,555
|
)
|
Liquidated Damages Payable
|
|
|
21,226
|
|
|
|
-
|
|
Payroll tax liabilities
|
|
|
-
|
|
|
|
10,155
|
|
Net cash (used in) operating activities
|
|
$
|
(147,300
|
)
|
|
$
|
(908,391
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Investment - Batterfly Energy Ltd
|
|
$
|
-
|
|
|
$
|
(32,500
|
)
|
Developed software
|
|
|
-
|
|
|
|
(14,625
|
)
|
Net cash (used in) provided by investing activities
|
|
$
|
-
|
|
|
$
|
(47,125
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Repurchase of common stock
|
|
|
-
|
|
|
|
-
|
|
Notes Payable
|
|
|
26,500
|
|
|
|
-
|
|
Proceed from convertible notes payables
|
|
|
45,000
|
|
|
|
500,000
|
|
Net cash provided by financing activities
|
|
$
|
71,500
|
|
|
$
|
500,000
|
|
|
|
|
|
|
|
|
|
|
Net cash increased in cash
|
|
|
(75,800
|
)
|
|
|
(455,516
|
)
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period
|
|
|
91,672
|
|
|
|
469,233
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
15,871
|
|
|
$
|
13,717
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
-
|
|
|
|
-
|
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CASH TRANSACTIONS AFFECTING OPERATING, INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of common shares issued as payment of debt
|
|
$
|
329,077.85
|
|
|
$
|
366,112
|
|
Value of common shares returned to treasury
|
|
$
|
-
|
|
|
$
|
-
|
|
Value of common shares issued for acquisition of Batterfly Energy LTD
|
|
$
|
-
|
|
|
$
|
5,091,000
|
|
Value of common shares issued as payment for services
|
|
$
|
5,400
|
|
|
$
|
-
|
|
Issuance of Common Stock for acquisition of Batterfly Energy LTD
|
|
|
9,500,000
|
|
|
|
5,091,000
|
|
Issuance of Common Stock for convertible notes payable
|
|
|
1,068,965,073
|
|
|
|
1,925,369
|
|
Issuance of Common Stock for services
|
|
|
3,000,000
|
|
|
|
-
|
|
Notes payable
|
|
|
426,361
|
|
|
|
500,000
|
|
The
accompanying notes are an integral part of these condensed, consolidated financial statements.
Life
Clips, Inc.
Footnotes
to Financial Statements December 31, 2017
NOTE
1. ORGANIZATION AND OPERATIONS
Business
and basis of presentation
– Life Clips, Inc. (the “Company”) was incorporated in Wyoming on March 20, 2013
as Blue Sky Media Corporation and its principal business was developing, financing, producing and distributing motion pictures
and related entertainment products. Following the Company’s October 2, 2015 acquisition of Klear Kapture, Inc. (“Klear
Kapture”), the Company continued Klear Kapture’s business of developing a body camera and an auditable software solution
suitable for use by law enforcement. The Company changed its name to Life Clips, Inc. on November 3, 2015 in order to better reflect
its business operations at the time.
On
July 11, 2016, the Company completed its previously announced acquisition (the “Acquisition”) of all of the outstanding
equity securities of Batterfly Energy Ltd. (“Batterfly”), an Israel-based corporation that develops and distributes
a single-use, cordless battery under the brand name Mobeego for use with cellular phones and other mobile devices. Batterfly is
now a wholly-owned subsidiary of the Company. The Acquisition was completed pursuant to a Stock Purchase Agreement, dated as of
June 10, 2016 (the “Purchase Agreement”), among the Company, Batterfly and all of the shareholders of Batterfly, as
amended.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use
of estimates
– The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets, 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 these estimates.
Cash
and cash equivalents
– For financial statement presentation purposes, the Company considers all short term investments
with a maturity date of three months or less to be cash equivalents.
Income
Tax
– The Company accounts for income taxes under ASC 740 “Income Taxes” which codified SFAS 109, “Accounting
for Income Taxes.” under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statements 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, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment
occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will
not realize tax assets through future operations.
Basic
and Diluted Net Income (Loss) Per Share
– The Company computes net income (loss) per share in accordance with ASC 260
“Earnings Per Share” which codified SFAS No. 128. “Earnings per Share.” ASC 260 requires presentation
of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the weighted average number of shares of common stock outstanding
during the period. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments
such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. Diluted
EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Intangible
Asset
– The Company is no longer developing software. The software was determined to be completely impaired during the
fiscal year ended June 30, 2017 and fully written off at that time.
Fair
Value of Financial Instruments
The
Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance
on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability,
as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that
market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes
a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation
techniques, are assigned a hierarchical level.
The
following are the hierarchical levels of inputs to measure fair value:
|
●
|
Level
1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
|
|
|
|
|
●
|
Level
2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for
similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities;
or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
|
●
|
Level
3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine
fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
The
carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets,
accounts payable & accrued expenses, certain notes payable and notes payable – related party, approximate their fair
values because of the short maturity of these instruments.
The
Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. See Note 8.
Embedded
Conversion Features
The
Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to
determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative
at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment
under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration
of any beneficial conversion feature.
Derivative
Financial Instruments
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the
derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the
fair value reported as charges or credits to income.
For
option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative
instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
Debt
Issue Costs and Debt Discount
The
Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These
costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life
of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Stock
based compensation
– ASC 718 “Compensation Stock Compensation” codified SFAS No. 123 prescribes accounting
and reporting standards for all stock based compensation plans payments award to employees, including employee stock options,
restricted stock, employee stock purchase plans and stock appreciation rights, which may be classified as either equity or liabilities.
The Company should determine if a present obligation to settle the share based payment transaction in cash or other assets exists.
A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks
commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies.
If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be
recognized as equity.
The
Company accounts for stock based compensation issued to nonemployees and consultants in accordance with the provisions of ASC
50550 “Equity Based Payments to Non-Employees” which codified SFAS 123 and the Emerging Issues Task Force consensus
in Issue No. 9618, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction
with Selling, Goods or Services”. Measurement of share based payment transactions with nonemployees shall be based on the
fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.
The fair value of the share based payment transaction should be determined at the earlier of performance commitment date or performance
completion date.
Recognition
of Revenues
– The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition
in Financial Statements”. This statement established that revenue can be recognized when persuasive evidence of an arrangement
exists, the services have been delivered, all significant contractual obligations have been satisfied, the fee is fixed or determinable
and collection is reasonably assured.
Subsequent
Events
– The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the
disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements are
issued.
Pursuant
to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued
when they are widely distributed to users, such as through filing them on EDGAR.
Recent
Pronouncements
– The Company reviewed all recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material
impact on the Company’s present or future financial statements.
NOTE
3. UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements,
the Company has minimal revenues, net accumulated losses since inception and a shareholders’ deficit of $(8,521,990). These
factors raise doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern
is dependent on management funding operating costs and the successful production and sales release of the Life Clips camera. The
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
4. NOTES PAYABLE
On
July 14, 2016 the Company issued a $30,000 promissory note to NUWA Group, LLC. The promissory note is not convertible into any
of the equity securities of the Company. The effective interest rate is 5.00% per annum, calculated yearly not in advance. The
note was to be repaid in full on October 14, 2016 and is past due/in default. Note proceeds were used for operating expenses.
Pursuant
to the Stock Purchase Agreement by and among Batterfly Energy, LTD and the Company, on July 11, 2016 the Company issued a $500,000
Promissory Note and Stock Pledge Agreement to the former shareholders of Batterfly Energy, LTD. The promissory note is not convertible
into any of the equity securities of the Company. The effective interest rate is 1.00% with a default interest rate of 10.00%.
The note is to be repaid in two (2) payments, $250,000 on October 11, 2016 and the balance due on February 13, 2017. The Company
has not paid the amounts due under this note. See Note 12.
On
September 25, 2017, Huey Long, on behalf of the Company, without Board approval, entered into a Mutual Release Agreement and 12%
Promissory Note with Scott Silverman. The note was in a principal amount of $26,500 and matured on March 1, 2018. The Company
is currently in negotiations with Mr. Silverman.
At
December 31, 2017 and June 30, 2017 the Company had notes payable in the amount of $556,500 and $530,000, respectively.
NOTE
5. CONVERTIBLE DEBT AND WARRANTS
The
Company has recorded derivative liabilities associated with convertible debt instruments and warrants, as more fully discussed
at Note 8.
(A)
Convertible Notes and Warrants
On
October 2, 2015, the Company completed an offering of its 3.85% Convertible Promissory Notes (the “3.85% Notes”) in
the aggregate principal amount of $617,578 and on December 7, 2015 the Company completed an offering of its 10% Convertible Promissory
Notes (the “10% Notes”) in the aggregate principal amount of $250,000 (the “10% Notes”, and together with
the 3.85% Notes, each a “Note” and collectively, the “Notes”), as applicable, with certain “accredited
investors” (the “Investors”), as defined under Regulation D, Rule 501 of the Securities Act. The entire principal
amount of the Notes remaining outstanding at December 31, 2017 was $261,467, such amount being exclusive of securities converted
into the Notes separate from the offering of the Notes. Pursuant to the offering of the Notes, the Company received $617,578 and
$250,000 in net proceeds on October 2, 2015 and December 7, 2015, respectively.
In
addition to the terms customarily included in such instruments, the Notes began accruing interest on the date that each Investor
submitted the principal balance of such Investor’s Note, with the interest thereon becoming due and payable on the two-year
anniversary of said date. Upon a default of the Notes, the interest rate will increase to 18%. The principal balance of each Note
and all unpaid interest will become due and payable twenty-four (24) months after the date of issuance. The Notes may be prepaid
with or without a penalty depending on the date of the prepayment. The principal and interest under the 3.85% Notes are converted
at $ $0.026. The principal and interest under the 10% Notes are convertible into shares of the Company’s common stock at
75% times the Volume Weighted Average Price for a 5 days period prior to the conversion date as quoted on the OTC market and pursuant
to the terms of a Security Purchase Agreement, dated as of October 2, 2015 and December 7, 2015, as applicable, by and between
the Company and each Investor. The balances of these Notes are past due/in default.
In
connection with the Notes Offering, the Company entered into Registration Rights Agreements, each dated as of October 2, 2015
and December 7, 2015 and each by and between us and each of the Investors.
The
Company entered into convertible notes with eleven third party accredited investors from December 2015 to December 2016. In addition
to the terms customarily included in such instruments, the Notes began accruing interest on the date that each Investor submitted
the principal balance of such Investor’s Note, with the interest thereon becoming due and payable on terms specified in
said date (see below). Interest rates range from 3.85% to 10% and are due at various dates from August 2016 to March 2018. These
notes are convertible at any time by the investor, prior to the note principal and interest being repaid at rates ranging from
$0.006 to $0.033 per share, subject to change due to a ratchet feature contained in most of the notes.
The
Company has determined that the conversion feature of the Notes represents an embedded derivative since the Notes are convertible
into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional debt and the embedded
conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. See Note 7 for further discussion.
Conversion
Price for all the notes listed in the table below is 50% of the average of the lowest three trading prices during the 20 trading
day period prior to the conversion date.
Balance
at
|
|
|
|
|
|
|
|
|
Purchased
|
|
|
Balance
at
December
31,
|
|
|
Interest
|
|
|
Interest
|
|
|
|
|
Interest
|
|
July
1, 2017
|
|
|
Additions
|
|
|
Conversions
|
|
|
(sold)
|
|
|
2017
|
|
|
Expense
|
|
|
converted
|
|
|
Due
Date
|
|
Rate
|
|
151,073
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,073
|
|
|
|
2,900
|
|
|
|
-
|
|
|
10/02/17
|
|
|
3.85
|
%
|
69,578
|
|
|
|
-
|
|
|
|
(69,578
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
541
|
|
|
|
4,027
|
|
|
10/02/17
|
|
|
3.85
|
%
|
44,473
|
|
|
|
-
|
|
|
|
(25,130
|
)
|
|
|
-
|
|
|
|
19,343
|
|
|
|
584
|
|
|
|
-
|
|
|
10/02/17
|
|
|
3.85
|
%
|
100,000
|
|
|
|
-
|
|
|
|
(8,949
|
)
|
|
|
-
|
|
|
|
91,051
|
|
|
|
8,246
|
|
|
|
-
|
|
|
12/07/16
|
|
|
10.00
|
%
|
300,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300,000
|
|
|
|
26,926
|
|
|
|
-
|
|
|
04/28/17
|
|
|
10.00
|
%
|
608,930
|
|
|
|
504,000
|
|
|
|
(37,625
|
)
|
|
|
-
|
|
|
|
1,075,305
|
|
|
|
50,702
|
|
|
|
-
|
|
|
05/14/17
|
|
|
10.00
|
%
|
51,791
|
|
|
|
-
|
|
|
|
(19,637
|
)
|
|
|
-
|
|
|
|
32,154
|
|
|
|
3,401
|
|
|
|
-
|
|
|
06/10/17
|
|
|
10.00
|
%
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
|
|
6,732
|
|
|
|
-
|
|
|
07/22/17
|
|
|
10.00
|
%
|
99,650
|
|
|
|
-
|
|
|
|
(108,800
|
)
|
|
|
-
|
|
|
|
(9,150
|
)
|
|
|
3,138
|
|
|
|
-
|
|
|
09/23/17
|
|
|
10.00
|
%
|
45,366
|
|
|
|
-
|
|
|
|
(45,366
|
)
|
|
|
-
|
|
|
|
0
|
|
|
|
974
|
|
|
|
4,983
|
|
|
10/19/17
|
|
|
10.00
|
%
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
249
|
|
|
|
-
|
|
|
01/28/18
|
|
|
10.00
|
%
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
249
|
|
|
|
-
|
|
|
01/28/18
|
|
|
10.00
|
%
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
249
|
|
|
|
-
|
|
|
02/03/18
|
|
|
10.00
|
%
|
11,666
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,666
|
|
|
|
582
|
|
|
|
-
|
|
|
02/11/18
|
|
|
10.00
|
%
|
11,668
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,668
|
|
|
|
582
|
|
|
|
-
|
|
|
02/11/18
|
|
|
10.00
|
%
|
11,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,700
|
|
|
|
583
|
|
|
|
-
|
|
|
02/15/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
02/18/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
02/24/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
03/15/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
03/16/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
03/18/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
03/29/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
04/04/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
05/02/18
|
|
|
10.00
|
%
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
2,493
|
|
|
|
-
|
|
|
06/02/18
|
|
|
10.00
|
%
|
30,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,000
|
|
|
|
1,509
|
|
|
|
-
|
|
|
09/17/18
|
|
|
18
.00
|
%
|
-
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
333
|
|
|
|
-
|
|
|
11/17/17
|
|
|
18.00
|
%
|
2,075,895
|
|
|
|
519,000
|
|
|
|
(315,084
|
)
|
|
|
-
|
|
|
|
2,279,810
|
|
|
|
130,920
|
|
|
|
9,010
|
|
|
|
|
|
|
|
The
Company has determined that the conversion feature of the Notes represents an embedded derivative since the Notes are convertible
into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional debt and the embedded
conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. See Note 8 for further discussion.
(B)
Terms of Debt
The
debt carries interest between 3.85%, 10% and 18% and is due in October 2017 through March 2019
All
convertible debt in connection with the Notes Offering are convertible at $0.026 and $0.033/share (on December 31, 2017), however,
the Notes include a “ratchet feature”, which allows for a lower conversion price based on market prices.
(C)
Future Commitments
At
December 31, 2017, the Company has outstanding convertible debt of $2,336,310 which is payable within the next fifteen months.
NOTE
6. DERIVATIVE LIABILITIES
The
Company identified conversion features embedded within convertible debt and warrants issued for the period ended December 31,
2017. The Company has determined that the features associated with the embedded conversion option, in the form a ratchet provision,
should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares
would be available to settle all potential future conversion and warrant transactions.
The
warrant are classified as liabilities or tainted
The
convertible notes will generate derivative liabilities.
|
|
Warrant
|
|
|
Convertible notes
|
|
|
Total
|
|
DL as of 6/30/2017
|
|
|
2,243
|
|
|
|
2,957,598
|
|
|
|
2,959,841
|
|
Initial DL
|
|
|
-
|
|
|
|
77,131
|
|
|
|
77,131
|
|
Changes in DL
|
|
|
-
|
|
|
|
1,825,723
|
|
|
|
1,825,723
|
|
Reclassify to APIC
|
|
|
-
|
|
|
|
(144,182
|
)
|
|
|
(144,182
|
)
|
DL as of 12/31/2017
|
|
|
2,243
|
|
|
|
4,716,270
|
|
|
|
4,718,513
|
|
The
fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following
management assumptions at December 31, 2017, using the lattice binomial valuation model:
|
|
Commitment
Date
|
|
|
Re-measurement
Date
|
|
Expected
dividends
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected
volatility
|
|
|
220
|
%
|
|
|
261
|
%
|
Expected
term
|
|
|
0.5
to 3 years
|
|
|
|
0.10-2.87
years
|
|
Risk
free interest rate
|
|
|
0.43%-1.11
|
%
|
|
|
0.36%-
0.71
|
%
|
NOTE
7. CONVERTIBLE DEBT - NET
The
Company recorded the debt discount to the extent of the gross proceeds raised, and expensed immediately the remaining fair value
of the derivative liability, as it exceeded the gross proceeds of the note.
The
Company recorded debt discount of 172,350 as of December 31, 2017 and $407,905 for the year ended June 30, 2017.
Accumulated
amortization of debt discount amounted to $846,055 as of December 31, 2017 and $2,146,527 for the year ended June 30, 2017.
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
Balance Prior Year
|
|
$
|
1,667,990
|
|
|
$
|
443,065.00
|
|
Proceeds
|
|
|
45,000
|
|
|
|
980,034
|
|
Repayments
|
|
|
(90,466
|
)
|
|
|
(951,725
|
)
|
Less: gross Debt Discount recorded
|
|
|
(245,567
|
)
|
|
|
(980,034
|
)
|
Add: Amortization of Debt Discount
|
|
|
730,504
|
|
|
|
2,146,650
|
|
Less: Current portion
|
|
|
(2,107,461
|
)
|
|
|
(1,637,990
|
)
|
Long-Term Convertible Debt
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE
8. STOCKHOLDERS’ EQUITY (DEFICIT)
Shares
Authorized
On
April 4, 2016, the Company filed Articles of Restatement with the Wyoming Secretary of State authorizing 320,000,000 shares of
common stock, par value $0.001 per share (the “Common Stock”) and 20,000,000 shares of Preferred Stock, par value
$0.001 (the “Preferred Stock”). The Board may issue shares of Preferred Stock in one or more series and fix the rights,
preferences and privileges thereof, including voting rights, terms of redemption, redemption prices, liquidation preferences,
number of shares constituting any series or the designation of such series, without further vote or action by the stockholders.
On
June 28, 2017, the Company filed Articles of Amendment to authorize an increase in the number of authorized shares of Common Stock
from 300,000,000 to 800,000,000.
On
September 28, 2017, the Company filed Articles of Amendment to authorize an increase in the number of authorized shares of Common
Stock from 800,000,000 to 5,000,000,000.
As
of December 31, 2017, the Company had 1,259,831,381 shares of Common Stock issued and outstanding.
Preferred
Stock
Effective
as of May 19, 2017, the Company amended its Articles of Incorporation to designate 1,000,000 shares of preferred stock as Series
A Preferred Stock, with a par value of $0.001 per share (the “Series A Stock”). Each share of Series A Stock ranks,
with respect to dividend rights and rights upon liquidation, winding up or dissolution of the Company, the same as the common
stock of the Company, par value $0.001 per share (the “Common Stock”) and is not entitled to any specific dividends
or other distributions, other than those declared by the Board of Directors. Each share of Series A Stock has 100 votes on any
matter submitted to the shareholders of the Company, and the Series A Stock votes together with the holders of the outstanding
shares of all other capital stock of the Company (including the Common Stock and any other series of preferred stock then outstanding),
and not as a separate class, series or voting group on any such matter. The Series A Preferred Stock is not transferrable by the
holder, and may be redeemed by the Company at any time for the par value. In the event that the holder of Series A Preferred Stock
who is an employee or officer of the Company leaves their position as an employee or officer of the Company for any reason, the
Series A Preferred Stock held by that holder will be automatically cancelled and will revert to being authorized and unissued
shares of Series A Preferred Stock. The Series A Stock is not convertible into any other class of shares of the Company.
On
May 25, 2017, the Company issued 1,000,000 shares of Series A Stock to Victoria Rudman, the Company’s Chief Financial Officer,
in return for services provided to the Company by Ms. Rudman and to ensure Ms. Rudman’s continued service to the Company.
Effective
as of June 2, 2017, the Company amended its Articles of Incorporation by amending the Certificate of Designation for the Series
A Stock to increase the number of votes that each share of Series A Stock has to 200 votes. Effective as of August 7, 2017, the
Company again amended its Articles of Incorporation by amending the Certificate of Designation for the Series A Stock to increase
the number of votes that each share of Series A Stock has to 400 votes.
On
April 20, 2016, the company adopted the Life Clips, Inc. 2016 Stock and Incentive Plan under which the Company may issue nonqualified
stock options, incentive stock options, stock appreciation rights, restricted stock grants and units, performance units and awards
of cash. A maximum of 20,000,000 shares of common stock may be issued under the plan, representing in excess of 35% of the number
of the Company’s currently outstanding shares. Awards under the plan will be made at the discretion of the Board of Directors,
although no awards have been made to date. Accordingly, the Company cannot currently determine the amount of awards that will
be made under the plan.
Common
Stock Issued
For
the nine-month period ended December 31, 2017, 1,071,965,073 shares of common stock were issued, bringing the total shares issued
and outstanding to 1,259,831,381.
The
table below represents the Company’s issuances of shares of its common stock in conjunction with conversions of the purchaser’s
convertible note payable. The conversion prices of the notes were stated at 50% multiplied by the Market Price, defined as the
lowest Trading Price for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior
to the Conversion Date. The reduction in proceeds to Convertible Notes Payable can be found in Note 7.
Date of Conversion
|
|
|
Number of Shares
|
|
|
Note Holder Name
|
|
Price per share
|
|
|
Value of Conversion (Reduction of Notes Payable)
|
|
July 6, 2017
|
|
|
|
5,984,848
|
|
|
St. George Conversion #7
|
|
$
|
0.00132
|
|
|
$
|
7,900.00
|
|
July 6, 2017
|
|
|
|
8,348,794
|
|
|
St. George True-Up for 6/20 (#5)
|
|
$
|
0.00290
|
|
|
|
24,211.50
|
|
July 14, 2017
|
|
|
|
8,775,449
|
|
|
JSJ Conversion
|
|
$
|
0.00090
|
|
|
|
7,897.90
|
|
July 24, 2017
|
|
|
|
10,500,000
|
|
|
Edgestone Conversion
|
|
$
|
0.00095
|
|
|
|
9,975.00
|
|
July 26, 2017
|
|
|
|
6,535,792
|
|
|
Taconic Conversion
|
|
$
|
0.00095
|
|
|
|
6,209.00
|
|
July 28, 2017
|
|
|
|
10,527,670
|
|
|
Forest Conversion
|
|
$
|
0.00085
|
|
|
|
8,948.52
|
|
July 28, 2017
|
|
|
|
10,527,670
|
|
|
Long Side Conversion
|
|
$
|
0.00085
|
|
|
|
8,948.52
|
|
July 31, 2017
|
|
|
|
11,319,546
|
|
|
JSJ Conversion
|
|
$
|
0.00080
|
|
|
|
9,055.64
|
|
July 31, 2017
|
|
|
|
11,320,755
|
|
|
St. George Conversion #8
|
|
$
|
0.00106
|
|
|
|
12,000.00
|
|
July 31, 2017
|
|
|
|
5,133,638
|
|
|
St. George True-Up for 7/6 (#6)
|
|
$
|
0.00420
|
|
|
|
21,561.28
|
|
August 2, 2017
|
|
|
|
13,964,037
|
|
|
Summit Conversion
|
|
$
|
0.00090
|
|
|
|
12,567.63
|
|
August 7, 2017
|
|
|
|
11,556,604
|
|
|
St. George Conversion #9
|
|
$
|
0.00106
|
|
|
|
12,250.00
|
|
August 7, 2017
|
|
|
|
12,499,000
|
|
|
Long Side Conversion
|
|
$
|
0.00090
|
|
|
|
11,249.10
|
|
August 10, 2017
|
|
|
|
11,319,546
|
|
|
JSJ Conversion
|
|
$
|
0.00080
|
|
|
|
9,055.64
|
|
August 15, 2017
|
|
|
|
15,800,000
|
|
|
Edgestone Conversion
|
|
$
|
0.00075
|
|
|
|
11,850.00
|
|
August 17, 2017
|
|
|
|
11,319,546
|
|
|
JSJ Conversion
|
|
$
|
0.00075
|
|
|
|
8,489.66
|
|
August 21, 2017
|
|
|
|
16,800,000
|
|
|
Long Side Conversion
|
|
$
|
0.00050
|
|
|
|
8,400.00
|
|
August 23, 2017
|
|
|
|
15,365,854
|
|
|
St. George Conversion #10
|
|
$
|
0.00082
|
|
|
|
12,600.00
|
|
August 23, 2017
|
|
|
|
1,467,982
|
|
|
St. George True-Up for 7/6 (#7)
|
|
$
|
0.00100
|
|
|
|
1,467.98
|
|
August 24, 2017
|
|
|
|
15,800,000
|
|
|
Edgestone Conversion
|
|
$
|
0.00035
|
|
|
|
5,530.00
|
|
August 28, 2017
|
|
|
|
16,684,458
|
|
|
JSJ Conversion
|
|
$
|
0.00035
|
|
|
|
5,839.56
|
|
August 29, 2017
|
|
|
|
31,521,739
|
|
|
St. George Conversion #11
|
|
$
|
0.00046
|
|
|
|
14,500.00
|
|
August 30, 2017
|
|
|
|
19,457,656
|
|
|
Long Side Conversion
|
|
$
|
0.00035
|
|
|
|
6,810.18
|
|
August 31, 2017
|
|
|
|
15,800,000
|
|
|
Edgestone Conversion
|
|
$
|
0.00035
|
|
|
|
5,530.00
|
|
September 6, 2017
|
|
|
|
16,684,458
|
|
|
JSJ Conversion
|
|
$
|
0.00035
|
|
|
|
5,839.56
|
|
September 6, 2017
|
|
|
|
16,477,273
|
|
|
St. George Conversion #12
|
|
$
|
0.00044
|
|
|
|
7,250.00
|
|
September 6, 2017
|
|
|
|
14,766,202
|
|
|
St. George True-Up for 7/31 (#8)
|
|
$
|
0.00080
|
|
|
|
11,812.96
|
|
September 13, 2017
|
|
|
|
15,800,000
|
|
|
Edgestone Conversion
|
|
$
|
0.00030
|
|
|
|
4,740.00
|
|
September 18, 2017
|
|
|
|
16,684,458
|
|
|
JSJ Conversion
|
|
$
|
0.00025
|
|
|
|
4,171.11
|
|
September 22, 2017
|
|
|
|
33,823,529
|
|
|
St. George Conversion #13
|
|
$
|
0.00034
|
|
|
|
11,500.00
|
|
September 22, 2017
|
|
|
|
17,610,063
|
|
|
St. George True-Up for 8/07 (#9)
|
|
$
|
0.00060
|
|
|
|
10,566.04
|
|
September 28, 2017
|
|
|
|
30,990,037
|
|
|
Long Side Conversion
|
|
$
|
0.00025
|
|
|
|
7,747.51
|
|
September 28, 2017
|
|
|
|
30,990,000
|
|
|
Taconic Conversion
|
|
$
|
0.00025
|
|
|
|
7,747.50
|
|
October 9, 2017
|
|
|
|
21,071,429
|
|
|
St. George Conversion #14
|
|
$
|
0.00028
|
|
|
|
5,900.00
|
|
October 9, 2017
|
|
|
|
21,692,970
|
|
|
St. George True-Up for 8/23 (#10)
|
|
$
|
0.00070
|
|
|
|
15,185.08
|
|
October 9, 2017
|
|
|
|
13,790,761
|
|
|
St. George True-Up for 8/29 (#11)
|
|
$
|
0.00070
|
|
|
|
9,653.53
|
|
October 9, 2017
|
|
|
|
25,295,228
|
|
|
JSJ Conversion
|
|
$
|
0.00020
|
|
|
|
4,983.16
|
|
October 11, 2017
|
|
|
|
35,345,073
|
|
|
Summit Conversion
|
|
$
|
0.00020
|
|
|
|
7,069.01
|
|
October 17, 2017
|
|
|
|
46,428,571
|
|
|
St. George Conversion #15
|
|
$
|
0.00028
|
|
|
|
13,000.00
|
|
October 18, 2017
|
|
|
|
39,930,895
|
|
|
Long Side Conversion
|
|
$
|
0.00020
|
|
|
|
7,986.18
|
|
October 24, 2017
|
|
|
|
49,583,333
|
|
|
St. George Conversion #16
|
|
$
|
0.00024
|
|
|
|
11,900.00
|
|
October 24, 2017
|
|
|
|
9,415,584
|
|
|
St. George True-Up for 8/23 (#12)
|
|
$
|
0.00030
|
|
|
|
2,824.68
|
|
October 24, 2017
|
|
|
|
44,240,232
|
|
|
Long Side Conversion
|
|
$
|
0.00015
|
|
|
|
6,636.03
|
|
November 7, 2017
|
|
|
|
49,391,866
|
|
|
Long Side Conversion
|
|
$
|
0.00010
|
|
|
|
4,939.19
|
|
November 14, 2017
|
|
|
|
51,856,520
|
|
|
Taconic Conversion
|
|
$
|
0.00010
|
|
|
|
5,185.65
|
|
November 14, 2017
|
|
|
|
51,856,520
|
|
|
Long Side Conversion
|
|
$
|
0.00010
|
|
|
|
5,185.65
|
|
November 22, 2017
|
|
|
|
57,031,800
|
|
|
Long Side Conversion
|
|
$
|
0.00010
|
|
|
|
5,703.18
|
|
December 14, 2017
|
|
|
|
59,877,687
|
|
|
Taconic Conversion
|
|
$
|
0.00010
|
|
|
|
5,987.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTALS
|
|
|
|
1,068,965,073
|
|
|
|
|
|
|
|
|
$
|
426,361.00
|
|
On
July 28, 2017, the Company re-issued, following the return of the shares of the company to facilitate the transaction with Ascenda,
3,000,000 shares of its common stock with a value of $0.0118 per common share to William Singer in connection with VP of Sales
services performed in 2016.
NOTE
9. STOCK INCENTIVE PLAN
On
April 20, 2016, the Company approved the Life Clips, Inc. 2016 Stock and Incentive Plan (“the Plan”). The Plan provides
for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock grants and
units, performance units and awards, and cash. The Plan allows for an issuance of a maximum of 20,000,000 shares of common stock,
with awards made at the discretion of the board of directors. No awards have been made to date.
NOTE
10. SUBSEQUENT EVENTS
The
Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent
events. The Company will evaluate subsequent events through the date of the issuance of the financial statements.
On
August 8, 2018, the Company entered into an 18% Convertible Promissory Note with Long Side Ventures LLC, an unaffiliated third
party. The note was in a principal amount of $15,000, and is convertible at a price equal to fifty percent (50%) of the lowest
trading price during the five trading day period prior to the date of conversion. The note maturity date is August 8, 2019.