NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note
1 - Organization and Basis of Presentation
Organization
and Line of Business
Token
Communities Ltd. (the “Company” or “Limited”) was organized under the laws of the State of Delaware on
March 6, 2014, under the name Pacific Media Group Enterprises, Inc. On April 7, 2017, the Company amended its Certificate
of Incorporation with the Secretary of State of Delaware, changing its name to Extract Pharmaceuticals Inc. On January 26,
2018, the Board of Directors adopted an Amendment to its Certificate of Incorporation, changing its name to Token Communities
Ltd. The Company is a development stage company that researches and creates white paper analysis for companies regarding
block chain technology.
On
February 26, 2018, the Company entered into an Acquisition and Share Exchange Agreement with Token Communities PLC (“PLC”).
Under the Agreement, the Company’s majority shareholder returned 19,266,000 common shares to treasury, and at closing
100% of the issued and outstanding shares of PLC were acquired by the Company, for 172,800,000 newly issued common shares equal
to 64% of the Company’s outstanding common stock as of the closing date, thus making the stockholders of PLC the majority
stockholders of the Company. The transaction closed on May 18, 2018. This transaction was accounted for as a reverse acquisition
under the purchase method of accounting since PLC obtained control of Limited. Accordingly, the merger of PLC into Limited was
recorded as a recapitalization of PLC, PLC being treated as the continuing entity. The transaction was treated as a recapitalization
and not as a business combination. Limited had 116,466,000 shares outstanding prior to the merger. At the time of the merger,
Limited’s principal stockholder surrendered 19,266,000 shares, which were cancelled. After the merger the total number
of Limited shares outstanding was 270,000,000.
PLC
is a Gibraltar Financial Advisory firm which specializes in Blockchain, Artificial Intelligence and Fin-Tech investment in incubating
as well as advising and managing qualified companies in the blockchain and distributed ledger technologies arena, including smart
contracts, TGEs, DApps, and more. Advisement comprises the authoring of industry standard White Papers, technical aspects, design
and implementation of market strategies, business appraisal and more. All potential clients are vetted and Anti-Money Laundering
/ Know-Your-Customer approved. The Company is also developing its own software technology with its dedicated team of developers.
The
historical financial statements presented are the financial statements of PLC. The Acquisition and Share Exchange Agreement was
treated as a recapitalization and not as a business combination; therefore, no pro forma information is disclosed. At the date
of the merger, the net liabilities of the legal acquirer, Limited, were $57,107.
The
combined entities are referred to hereafter as the “Company.”
On
May 28, 2020, the Company acquired 3.5 billion iRide tokens in exchange for 80 million shares provided to iRide.io Tech Pte.,
Ltd., valued at $8,000, which was immediately expensed. On July 14, 2020, a change in control of the Company was affected by a
privately held corporation (American Software Capital, Inc. (“American Software”), controlled by the President of
the Company) acquiring 83% of the outstanding stock of the Company. As part of this transaction, the Company transferred 3.5 billion
iRide tokens and 1,745,406 shares of its common stock to American Software in exchange for all technology, software codes and
other intelligent products of the Lukki Exchange, a non-operating cyber coin exchange. Since the Lukki exchange had no previous
material revenue nor assets, the acquisition has been accounted for as an asset acquisition and due to the facts that it has no
value, and the parties to this transaction are related, the transaction has been accounted for as $(0), the value of the tokens
are $(0), and no financial statements are being provided as part of the transaction. As a condition to the closing of the transactions
contemplated above shareholders agreed to cancel an aggregate of 174,540,600 shares of Common Stock of the Company, and the holders
of the Company’s Series A, B, C, D and E warrants agreed to the cancellation of all such warrants.
Basis
of Presentation
The
accompanying consolidated financial statements (“CFS”) were prepared in conformity with accounting principles generally
accepted in the United States (“U.S. GAAP”). Limited’s functional currency is the United States Dollars (“$”
or “USD”) and Limited’s wholly-owned subsidiary, PLC’s functional currency is the Pound Sterling (“GBP”).
Going
Concern
The
accompanying CFS were prepared in conformity with U.S. GAAP, which contemplates the continuation of the Company as a going concern.
The Company had a stockholders’ deficit of $1,364,027 at March 31, 2021 and has incurred losses from operations since
inception and expects to continue to generate operating losses and negative cash flows for the foreseeable future. These factors
raise substantial doubt about the Company’s ability to continue as a going concern. The continued operations of the Company
are dependent upon its ability to raise additional capital, obtain additional financing and/or acquire or develop a business that
generates sufficient positive cash flows from operations.
The
accompanying CFS do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
Foreign
Currency Translation
The
accounts of Limited are maintained in USD and the accounts of PLC are maintained in GBP. The accounts of PLC are translated into
USD in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 830 Foreign Currency Transaction, with the GBP as the functional currency. According to Topic 830, all assets and
liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical
rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation
adjustments are reported under other comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income.
Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement
of operations and comprehensive income (loss). The following table details the exchange rates used for the periods.
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
Period end: GBP to USD exchange rate
|
|
$
|
1.37
|
|
|
$
|
1.24
|
|
Average period: GBP to USD exchange rate
|
|
$
|
1.31
|
|
|
$
|
1.26
|
|
Note
2 – Summary of Significant Accounting Policies
Use
of Estimates
The
preparation of CFS in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the CFS and the
reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and
assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other
factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from
other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s
estimates. To the extent there are material differences between the estimates and the actual results, future results of
operations will be affected.
Principles
of Consolidation
The
accompanying CFS include the accounts of Limited and its wholly-owned Subsidiary, PLC. All significant intercompany transactions
and balances were eliminated in consolidation.
Cash
Equivalents
For
the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid
debt instruments with original maturities of three months or less.
Accounts
Receivable
Accounts
receivable are recorded, net of allowance for doubtful accounts and sales returns. Management reviews the composition of accounts
receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends and
changes in customer payment patterns to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful
accounts is made when collection of the full amount is no longer probable. Delinquent account balances are written-off after management
has determined that the likelihood of collection is not probable and known bad debts are written off against the allowance for
doubtful accounts when identified. As of March 31, 2021 and 2020, the allowance for uncollectible accounts receivable was
zero.
Derivative
Financial Instruments
The
Company evaluates its agreements to determine if such instruments have 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 in the statements
of operations. Valuation of the derivatives by the Company requires significant estimates and assumptions for each period. For
the periods ended March 31, 2021 and June 30, 2020 respectively, the assumptions related to derivative valuation was as follows:
Estimate
and assumption
|
|
March 31,
2021
|
|
June 30,
2020
|
|
March 31,
2020
|
|
Volatility
|
|
N/A
|
|
172.45%
|
|
760.09%
|
|
Expected remaining
term
|
|
N/A
|
|
2 years
|
|
2.42 years
|
|
Exercise price
|
|
N/A
|
|
$1.05 - $2.00
|
|
$.07 - $2.00
|
|
Stock price
|
|
N/A
|
|
$7.00
|
|
$1.51
|
|
Dividend rate
|
|
N/A
|
|
0%
|
|
0%
|
|
Discount rate
|
|
N/A
|
|
0.17%
|
|
0.26%
|
|
For
stock-based derivative financial instruments, the Company uses a Black-Scholes-Merton option pricing model to value the derivative
instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative
instrument could be required within 12 months of the balance sheet date. As of March 31, 2020, the Company’s only derivative
financial instruments were outstanding warrants since the Company did not have enough unissued authorized shares to satisfy the
exercise of all the outstanding warrants. As of June 30, 2020, we noted that the warrant holders released the Company of
their obligation under the original warrants as part of the transaction on July 14, 2020. As evidence was obtained that impacted
the valuation on June 30, 2020 after the balance sheet date that impacted the balance at June 30, 2020, the warrants were written
down to zero. There were not additional warrants issued during the period ended March 31, 2021.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash and equivalents, accounts receivable, accounts payable, trust
liability and advances, the carrying amounts approximate their fair values due to their short maturities.
FASB
ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value (“FV”) of financial
instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines FV, and establishes a three-level valuation
hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported
in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable
estimate of their FVs because of the short period of time between the origination of such instruments and their expected realization
and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
|
●
|
Level 1 inputs to
the valuation methodology are quoted prices for identical assets or liabilities in active markets.
|
|
●
|
Level 2 inputs to
the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical
or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument.
|
|
●
|
Level 3 inputs to
the valuation methodology use one or more unobservable inputs which are significant to the FV measurement.
|
The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing
Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
The
Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their fair values were determined by using
the Black-Scholes-Merton pricing model based on various assumptions. As of June 30, 2020, the Company’s stock price used
in the Black-Scholes-Merton pricing model was based on recent sales of the Company’s common stock to unrelated investors
since there no market price for the Company’s common stock at March 31, 2020. The Company’s derivative liabilities
are adjusted to reflect FV at each period end, with any increase or decrease in the FV being recorded in results of operations
as adjustments to fair value of derivatives.
Revenue
Recognition
ASU
No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company
on July 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected
by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the
implementation of Topic 606. As sales are and have been primarily from advisory fees and related services, and the
Company has no significant post-delivery obligations, this did not result in a material recognition of revenue on our accompanying
CFS for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total
revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605,
Revenue Recognition.
Revenue
from advisory fees and related services are recognized under Topic 606 in a manner that reasonably reflects the
delivery of services to customers in return for expected consideration and includes the following elements:
|
●
|
executed contract(s)
with our customer(s) that we believe is legally enforceable;
|
|
●
|
identification of
performance obligation in the respective contract;
|
|
●
|
determination of
the transaction price for each performance obligation in the respective contract;
|
|
●
|
allocation of the
transaction price to each performance obligation; and
|
|
●
|
recognition of revenue
only when the Company satisfies each performance obligation.
|
These
five elements, as applied to the Company’s only revenue category, are summarized below:
|
●
|
Advisory fees and
related services – the Company charges advisory fees for a suite of one to two dozen services that include advising
on where to establish a corporation, establishing the corporation (often Gibraltar or Malta), writing white paper, setting
up website, making videos or animations describing the company and its business, engaging in public relations, and introducing
potential investors.
|
Income
Taxes
The
Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the
asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not
be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date
of enactment.
Under
ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would
be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount
of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more
likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting
periods presented.
Basic
and Diluted Earnings (loss) Per Share
Earnings
per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”)
is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive
securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants
are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby
were used to purchase common stock at the average market price during the period. There were no potentially dilutive securities
outstanding during any of the periods presented in these financial statements.
Foreign
Currency Transactions and Comprehensive Income
U.S.
GAAP generally requires recognized revenue, expenses, gains and losses be included in net income. Certain statements, however,
require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as
a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive
income. The functional currency of the Company’s subsidiary is the GBP. Translation gain of $19,609 at March 31, 2021 is
classified as an item of other comprehensive income in the stockholders’ deficit section of the balance sheet.
Statement
of Cash Flows
Cash
flows from the Company’s operations are calculated based upon the local currencies using the average translation rates.
As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with
changes in the corresponding balances on the balance sheets.
Recent
Accounting Pronouncements
In
January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805)
Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective
of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals
of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill,
and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2017 and should
be applied prospectively on or after the effective date. The Company is in the process of evaluating the impact of this ASU on
the Company’s CFS.
In
November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted
cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash
flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet.
ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The
adoption of this ASU did not have an impact on the Company’s CFS.
In
October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory,
which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when
the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early
adoption permitted. The Company is in the process of evaluating the impact of this ASU on the Company’s CFS.
In
August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash
Receipts and Cash Payments. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash
payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is
effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The adoption of
this ASU did not have an impact on the Company’s CFS.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets
and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective
for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018,
with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on the Company’s CFS.
In
May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue
recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace
it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize
revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional
disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted
only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be
able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.
The Company adopted this ASU on October 13, 2017 and used the modified retrospective method of adoption. The adoption of this
ASU did not have a material impact on the Company’s CFS.
Management
does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying
CFS. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Risks
and Uncertainties
In
December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak
was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries
and infections have been reported globally fiscal first quarter and potentially beyond.
Because
COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities
have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more
restrictive proclamations and/or directives may be issued in the future. As a result, all of our office locations have been closed
effective April 1, 2020.
The
ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments,
which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information
which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that
governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer
traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated
to have a material adverse impact on our business, financial condition and results of operations.
The
measures taken to date will impact the Company’s business for the fiscal fourth quarter and potentially beyond. Management
expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance
of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot
be determined at this time.
Financial statement
adjustment
During the period ended
March 31, 2021, the Company identified an error in recognition of shares issued for services in prior periods. The correction resulted
in an income statement impact of 330,000 and reduced the total shares outstanding and additional paid in capital by 30
and 329,970, respectively. The company corrected the error
and the reflected financial statements accurately represent the position of the Company as of March 31, 2021.
Management’s
Evaluation of Subsequent Events
The
Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the CFS were
issued. Based upon the review, the Company did not identify any recognized or non-recognized subsequent events that would have
required adjustment or disclosure in the CFS.
NOTE
3 – ACCRUED EXPENSES
Accrued
expenses payable consisted of the following at March 31, 2021 and June 30, 2020:
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
Director fees
|
|
$
|
236,582
|
|
|
$
|
236,582
|
|
Accrued professional services
|
|
|
31,000
|
|
|
|
-
|
|
Other
|
|
|
45,608
|
|
|
|
323
|
|
Total Accrued Expenses
|
|
$
|
313,190
|
|
|
$
|
236,905
|
|
Note
4 – Stockholders’ Equity
As
of March 31, 2021, the authorized share capital of the Company consists of 5,000,000,000 shares of common and 20,000,000 shares
of preferred stock with $0.0001 par value. Each outstanding share of common stock entitles the holder to one vote per share on
all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive
rights.
Prior
to the transaction described in Note 1, the Company had 116,466,000 shares of common stock outstanding. At the time of the merger,
a principal shareholder surrendered 19,266,000 shares of common stock, which were cancelled. Also at the time of the merger, 172,800,000
shares of common stock were issued for all of the issued and outstanding shares of PLC. The total shares outstanding at
June 30, 2019 was 270,000,000. See Note 1 above.
Prior
to the transaction, the Company had 135,000,000 warrants outstanding consisting of 27,000,000 “A Warrants” each convertible
into one share of common stock at $0.074; 27,000,000 “B Warrants” each convertible into one share of common stock
at an exercise price of $0.093; 27,000,000 “C Warrants” each convertible into one share of common stock at $0.111;
27,000,000 “D Warrants” each convertible into one share of common stock at $0.129; and 27,000,000 “E Warrants”
each convertible into one share of common stock at $0.148.
On
February 19, 2019, the Company and the holders of 81,000,000 Warrants executed an Amendment and Modification Agreement, changing
the warrant exercise prices from $0.074 to $0.148, to $1.90 for all classes of warrants it held. On the same day the Company and
the holders of 43,200,000 warrants split equally between Class B, C, D and E (10,800,000 per class) executed an Amendment and
Modification Agreement, changing the warrant exercise price to a phased strike price ranging between $1.05 and $2.00. Previously
the holder of 10,800,000 “A Warrants” also entered into an amendment and modification agreement, changing the warrant
strike price ranging from $1.05 to $2.00
Following
the transaction described in Note 1, last year a number of warrants which had previously been issued have been under review by
the Company to ensure their original terms and conditions were not out of synchronization with the business plans overall of the
newly restructured company going forward. One warrant holder of A Class warrants requested the original terms of his warrants
be amended to accommodate the anticipated rise in value execution of the business plan would be expected to have on the Company
value. Increases in the warrant strike price benefits the Company as increased funds are raised and placed directly in the company
upon the exercise of the warrant. Accordingly the Company consented to vary the strike price on an increasing sliding scale from
$1.05 to $2.00. Following a review post the recent share fluctuations, management and the other warrant holders agreed it is in
the best interests of the Company, stock and warrant holders that the remaining warrants are also amended to follow the precedent
set in respect of the previously amended warrant conditions. With the exception of the A Class warrants already amended as detailed
above the remaining warrants have been extended to expire on August 30, 2022. This was finalized on February 21, 2019.
The
warrants were cancelled subsequent to the year ended June 30, 2020.
On
July 23, 2019, the Company issued 80,000,000 shares as part of an acquisition whose terms were considered immaterial.
On June 30, 2020 certain creditors agreed to settle debts in the
amount of $ 268,942 for 277,200,000 shares of common stock. .These shares have not been issued as of March 31, 2021 and therefore the
amount has been recorded as common shares to be issued in the statement of shareholders’ equity.
On July 14, 2020, the Company issued 1,745,406,000 shares as part
of the acquisition agreement described in Note 1. This resulted in an expense on the income statement in the amount of $ 174,541.
On
August 12, 2020, the Company issued 265,162 shares of common stock for services with a deemed value of $ 265,162.
Note
5 - Related Party Transactions
Amounts
due to a related party are for advances made by a stockholder and officer of the Company. The balance due of $579,918 and $261,695
as at March 31, 2021 and June 30, 2020 respectively, is presented as due to related parties in the accompanying consolidated balance
sheet. The amounts due are non-interest bearing and payable upon demand. In the period ended March 31, 2021, certain related
parties forgave advances and accrued expenses in the amount of $262,116. This resulted in a gain on forgiveness of debt on the
income statement in the amount of $262,116.
Note
6 – Commitments and Contingencies
The
Company is party to certain legal proceedings from time to time incidental to the conduct of its business. These proceedings could
result in fines, penalties, compensatory or treble damages or non-monetary relief. The nature of legal proceedings is such that
the Company cannot assure the outcome of any particular matter, and an unfavorable ruling or development could have a materially
adverse effect on the Company’s CFS in the period in which a ruling or settlement occurs. However, based on information
available to the Company’s management to date, the Company’s management does not expect the outcome of any matter
pending against the Company is likely to have a material effect on the Company’s CFS.
On
July 6, 2018 PLC entered into a binding agreement to purchase 75% of new issued ordinary shares of i-Deal Corp Limited, which
has developed a communication platform for Publicly Listed, Private companies and investors around the globe. i-Deal Corp Limited
established the i-DX communication platform for companies and investors and has more than 2,000 diverse users. The i-DX platform
has seen activity from more than 40 countries with placings of equity and debt across a broad range of industries including oil
and gas, real estate, automotive, pharmaceuticals, beverages, software, mining, alternative energy, and financial services These
users include listed and private companies, and blockchain companies; private and institutional investors; investment companies
(angel investors and VCs); and P2P lending funds. The platform is also used by intermediaries representing multiple clients to
reach international investors to enlarge their existing distribution network. i-Dx is exclusively a communication platform that
matches and allows companies and potential investors to initially contact each other. i-Deal Corp Limited and i-DX does not transact,
promote, advise, make recommendations, trade, bring about or earn commission on any financial transactions.
In
order for the transaction to become effective it was acknowledged by both parties that the Company needs to raise the required
funding to finance the transaction. Both parties agreed that the date for the first closing ($500,000) will take place by bank
transfer no later than mid-March 2019. The following payments will be 90 days later (i.e. on or before May 31, 20219) as follows:
$2,250,000 by way of bank transfer and $2,250,000 by the issue of 2,250,000 new shares of common stock of the Company. As of the
date of this report the transaction had not yet closed and the Company does not anticipate this will close.
On
April 2, 2019, the Company executed an Acquisition and Exchange Agreement with Lalit Kumar Verma and Manickam Mahalingam, who
together control 100% of the common shares of ABT Auto Investments Ltd., a private English company. Pursuant to the Agreement,
Messrs. Verma and Mahalingam were to exchange 96,001 shares, representing 100% of the common shares of ABT Auto Investments Ltd
for a total of 3,530,000,000 new issue treasury shares issued by the Company, representing 95% ownership of the Company. On June
20, 2019, the Company executed a Mutual Rescission and Release Agreement, mutually rescinding the Acquisition and Exchange Agreement
with Fortress Ventures LLC represented by Lalit Kumar Verma and with ABT Investments India Pvt Ltd represented by Manickam Mahalingam.
The Mutual Rescission and Release agreement executed and became effective as of June 20, 2019. As a consequence of its execution
and the rescinding of the Share Exchange and Acquisition Agreement, the Company will not issue the 3,530,000,000 shares of common
stock.