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EX-32 - EXHIBIT 32.2 - INTERNATIONAL LEADERS CAPITAL Corpex322.htm
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EX-31 - EXHIBIT 31.2 - INTERNATIONAL LEADERS CAPITAL Corpex312.htm
EX-31 - EXHIBIT 31.1 - INTERNATIONAL LEADERS CAPITAL Corpex311.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2017

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-53780

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

(Exact name of registrant as specified in its charter)

 

Nevada 27-0491634
(State or other jurisdiction of incorporation or organization (I.R.S. Employer Identification No.)
   

1980 Festival Plaza Drive. Suite 530

Las Vegas, Nevada

 

89135

(Address of Principal executive offices) (Zip Code)
   
Registrant’s telephone number, including area code. (702) 628-8899

 

Star Century Pandaho Corporation

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered under Section 12(b) of the Exchange Act: None
   
Securities registered under Section 12(g) of the Exchange Act: Common stock, par value $0.001 per share
  (Title of Class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 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. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

 

  Large accelerated filer                   ¨     Accelerated filer                    ¨     
  Non-accelerated filer                     ¨      Smaller reporting company   x
  Emerging Growth Company        ¨       

 

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

 

Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of December 31, 2016: $123,764

 

As of September 20, 2017 the registrant had 1,574,179 outstanding shares of Common Stock.


Documents incorporated by reference: None.

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TABLE OF CONTENTS

PART I   Page
Item 1. Business 4
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 8
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 4.  Mine Safety Disclosures 8
PART II    
Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 8
Item 6. Selected Financial Data 9
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 13
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 13
Item 9A. Controls and Procedures 13
Item 9B. Other Information 14
PART III    
Item 10. Directors, Executive Officers and Corporate Governance 14
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 17
Item 13. Certain Relationships and Related Transactions and Director Independence 17
Item 14. Principal Accountant Fees and Services 17
PART IV    
Item 15. Exhibits, Financial Statement Schedules 18
  Signatures 19

 

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PART I.

Forward-Looking Information

 

Much of the discussion in this Item is “forward looking”.  Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments.  Other factors that could cause results to differ materially are described in our filings with the Securities and Exchange Commission.

 

There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to, general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders, and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow.

 

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof.  We believe the information contained in this Form 10-K to be accurate as of the date hereof.  Changes may occur after that date.   We will not update that information except as required by law in the normal course of its public disclosure practices.

 

ITEM 1. BUSINESS.

 

Company Overview

 

International Leaders Capital Corporation (formerly Star Century Pandaho Corporation) (“SCPD” or "the Company") was organized under the laws of the State of Nevada on May 21, 2009.

 

On May 28, 2017, Star Century Entertainment Corporation, a shareholder of the Company, agreed to sell 25,000 shares of the Company’s Series B preferred shares, representing approximately 99% of the voting control of the Company, to ILC Holdings, LLC, an unrelated third party, and the Company experienced a change in control. At May 28, 2017, ILC Holdings, LLC did not have any operations and had minimal assets and liabilities. In conjunction with the change in control, three individuals were elected to be the Company’s management, and the Company’s former Chief Executive Officer, former Chief Operating Officer, and former Director of Public Relations resigned. Effective August 2, 2017, the Company’s Board of Directors and a majority of the shareholders of the Company amended the Company’s Articles of Incorporation to (i) change the name of the Company to International Leaders Capital Corporation and (ii) effect a 1-for-50 reverse common stock split. All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split.

 

The Company’s previous majority shareholders had planned to build Pandaho, a cartoon styled character, into a competitive cartoon brand in China and surrounding areas with Pandaho-themed merchandise and multi-media exhibitions. Commensurate with the shareholder transactions on May 28, 2017, the Company plans to operate a financial services firm which provides consulting services for businesses and training programs for general investors. The Company anticipates earning revenue from (1) business training and consulting and (2) jointly investing in quality projects and ventures for companies which we serve. Our professional investment education program commences with a three day intensive program for general investors which is further reinforced with monthly training courses. In addition, we offer a roadshow platform for OTC listed companies which guides clients through the fund raising process.

 

The Company’s headquarters are based in Las Vegas, Nevada with planned primary operation in mainland China and Asia.

 

Employees

 

International Leaders Capital Corporation currently has two employees.

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Office and Facilities

 

Our corporate headquarters are located at 1980 Festival Plaza Drive, Suite 530, Las Vegas, Nevada 89135.

 

ITEM 1A. RISK FACTORS.

 

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our common stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occurs, our business, financial condition or results of operations could be seriously harmed.

 

RISK FACTORS CONCERNING OUR BUSINESS

 

Our business is subject to numerous risk factors, including the following:

 

The Company's independent registered public accounting firm have issued a report questioning the Company's ability to continue as a going concern.

 

Primarily as a result of our recurring losses and our lack of liquidity, the Company’s independent registered public accounting firm, in their report on our financial statements for the year ending June 30, 2017, expressed substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. We anticipate incurring losses in the foreseeable future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

 

We have had little operating history and no revenues or earnings from operations.

 

We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until we begin to generate revenue from new plan of operations. This may result in us incurring a net operating loss that will increase continuously until we can generate revenues or raise additional capital through other means. There is no assurance that we can identify such a business entity and consummate such an agreement or combination.

 

We do not have significant cash or other material assets and we are relying on advances from stockholders, officers and directors to meet our limited operating expenses. We may become insolvent if we are unable to pay our debts in the ordinary course of business as they become due.

 

Our proposed plan of operation is speculative.

 

Our proposed plan of operation strategy depends in large part on our ability to build a robust platform of official and professional fan clubs for the celebrities. We may not be able to enter into a substantial number of contracts that we anticipate would be necessary to support our business model.

  

There can be no assurance that the Company will be able to enhance its products or services, or develop other products or services.

 

If we are unable to achieve profitability in the future, recruit sufficient personnel or raise money in the future, our ability to develop our services would be adversely affected. Our inability to develop our services or develop new services, in view of rapidly changing technology, changing customer demands and competitive pressures, would have a material adverse effect upon our business, operating results and financial condition.

 

Our principal shareholder will be able to approve all corporate actions without shareholder consent and will control our Company.

 

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On January 8, 2015, Star Century Entertainment Corporation owned 53.66% of the Company’s total outstanding shares of common stock. In May and June 2015, the Company issued approximately 67.9 million shares of common stock for the licensing of the Pandaho intellectual property and for various services. After the issuance of shares, Star Century Entertainment Corporation owned less than 1% of our Common Stock. On September 4, 2015, the Board of Directors designated 100,000 shares of Series B Preferred Stock, par value $0.01. Each share of Series B Preferred Stock has the voting power of 5,000 common shares. On September 8, 2015, the Company issued 25,000 shares of Series B Preferred Stock to Star Century Entertainment Corporation has voting power of 125,000,000 common shares and will have significant influence over all matters requiring approval by our shareholders, but not requiring the approval of the minority shareholders. Because it will have the majority of voting rights, it will be able to elect all of the members of our board of directors, allowing it to exercise significant control of our affairs and management. In addition, it may transact most corporate matters requiring shareholder approval by written consent, without a duly-noticed and duly-held meeting of shareholders.

 

On May 28, 2017, Star Century Entertainment Corporation and ILC Holdings, LLC entered into a Share Purchase Agreement pursuant to which Star Century Entertainment Corporation sold an aggregate of 25,000 shares of Series B preferred shares of the Registrant’s preferred stock to ILC Holdings, LLC at a purchase price of $50,000. Each share of Series B Preferred Stock has the voting power of 5,000 common shares. The 25,000 shares of Series B Preferred Stock has voting power of 125,000,000 common shares and the shares represent approximately 99% of the voting control of International Leaders Capital Corporation which is significant influence over all matters requiring approval by our shareholders, but not requiring the approval of the minority shareholders.

 

The reporting requirements under federal securities law may delay or prevent us from making certain acquisitions.

 

Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended, (the "1934 Act"), require companies subject thereto to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the 1934 Act are applicable.

 

In addition to the audited financial statements, the time and additional costs that may be incurred by some target entities to prepare and disclose such information may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company.

 

An acquisition could create a situation wherein we would be required to register under The Investment Company Act of 1940 and thus be required to incur substantial additional costs and expenses.

 

Although we will be subject to regulation under the 1934 Act, management believes the Company will not be subject to regulation under the Investment Company Act of 1940, insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage in a business combination that results in us holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the Securities and Exchange Commission as to the status of our Company under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject us to material adverse consequences.

 

The requirement of audited financial statements may disqualify some business opportunities seeking a business combination with us.

 Our management believes that any potential business combination opportunity must provide audited financial statements for review, for the protection of all parties to the business combination. One or more attractive business opportunities may choose to forego the possibility of a business combination with us, rather than incur the expenses associated with preparing audited financial statements. 

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If our Common Stock does not meet blue sky resale requirements, certain shareholders may be unable to resell our Common Stock.

 

The resale of Common Stock must meet the blue sky resale requirements in the states in which the proposed purchasers reside. If we are unable to qualify the Common Stock and there is no exemption from qualification in certain states, the holders of the Common Stock or the purchasers of the Common Stock may be unable to sell them.

 

Our shareholders may face significant restrictions on the resale of our Common Stock due to state "blue sky" laws or if we are determined to be a "blank check" company.

 

There are state regulations that may adversely affect the transferability of our Common Stock. We have not registered our Common Stock for resale under the securities or "blue sky" laws of any state. We may seek qualification or advise our shareholders of the availability of an exemption. We are under no obligation to register or qualify our Common Stock in any state or to advise the shareholders of any exemptions.

 

Current shareholders, and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that there might be significant state restrictions upon the ability of new investors to purchase the Common Stock. 

Blue sky laws, regulations, orders, or interpretations place limitations on offerings or sales of securities by "blank check" companies or in "blind-pool" offerings, or if such securities represent "cheap stock" previously issued to promoters or others. Our former CEO, because he received stock at a price of $.001 for each share, may be deemed to hold "cheap stock." These limitations typically provide, in the form of one or more of the following limitations that such securities are:

 

(a) Not eligible for sale under exemption provisions permitting sales without registration to accredited investors or qualified purchasers;

 

(b) Not eligible for the transaction exemption from registration for non-issuer transactions by a registered broker-dealer;

 

(c) Not eligible for registration under the simplified small corporate offering registration (SCOR) form available in many states;

 

(d) Not eligible for the "solicitations of interest" exception to securities registration requirements available in many states;

 

(e) Not permitted to be registered or exempted from registration, and thus not permitted to be sold in the state under any circumstances.

 

Virtually all 50 states have adopted one or more of these limitations, or other limitations or restrictions affecting the sale or resale of stock of blank check companies or securities sold in "blind pool" offerings or "cheap stock" issued to promoters or others. Specific limitations on such offerings have been adopted in:

 

Alaska                          Nevada   Tennessee
Arkansas New Mexico            Texas
California Ohio Utah
Delaware          Oklahoma   Vermont
 Florida              Oregon Washington
Georgia             Pennsylvania  
Idaho                 Rhode Island  
Indiana               South Carolina  
Nebraska South Dakota  

 

Any secondary trading market which may develop may only be conducted in those jurisdictions where an applicable exemption is available or where the shares have been registered.

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Current shareholders and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that we are under no obligation to register the shares on behalf of our shareholders under the Securities Act of 1933, as amended.

 

The Company's officers, directors and majority shareholders have expressed their intentions not to engage in any transactions with respect to the Company's Common Stock except in connection with or following a business combination resulting in us no longer being defined as a blank check issuer. Any transactions in our Common Stock by said shareholders will require compliance with the registration requirements under the Securities Act of 1933, as amended.

 

Our Common Stock may be subject to significant restriction on resale due to federal penny stock restrictions.

 

The Securities and Exchange Commission has adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker or dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The penny stock rules also require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

 

These disclosure requirements may have the effect of reducing the level of trading activity in any secondary market for our stock that becomes subject to the penny stock rules, and accordingly, shareholders of our Common Stock may find it difficult to sell their securities, if at all.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our fiscal year 2017 that remain unresolved.

ITEM 2. PROPERTIES. 

The Company owns no real property.

 

ITEM 3. LEGAL PROCEEDINGS. 

 

None.

ITEM 4. MINE SAFETY DISCLOSURES

N/A

PART II.

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

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Our common stock is quoted under the symbol “SCPD” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc.  Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA.  Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting.

 

Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

 

The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. On August 2, 2017, the directors and a majority of the stockholders of the Company approved a reverse stock split of all the Company’s outstanding common stock at a ratio of fifty to one (50 to 1). Prices for our common stock for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split.

 

 

Fiscal Year Ending June 30, 2017
Quarter Ended   High $   Low $
June 30, 2017   $1.00   $0.50
March 31, 2017   $1.50   $0.50
December 31, 2016   $4.00   $0.50
September 30, 2016   $3.00   $2.50

 

Fiscal Year Ending June 30, 2016
Quarter Ended   High $   Low $
June 30, 2016   $27.50   $3.00
March 31, 2016   $40.00   $25.00
December 31, 2015   $49.50   $27.50
September 30, 2015   $50.00   $27.50

 

On September 20, 2017, the last sales price per share of our common stock was $0.56.

 

Penny Stock

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

 

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

International Leaders Capital Corporation (formerly Star Century Pandaho Corporation) (“SCPD” or "the Company") was organized under the laws of the State of Nevada on May 21, 2009.

 

On May 28, 2017, Star Century Entertainment Corporation, a shareholder of the Company, agreed to sell 25,000 shares of the Company’s Series B preferred shares, representing approximately 99% of the voting control of the Company, to ILC Holdings, LLC, an unrelated third party, and the Company experienced a change in control. At May 28, 2017, ILC Holdings, LLC did not have any operations and had minimal assets and liabilities. In conjunction with the change in control, three individuals were elected to be the Company’s management, and the Company’s former Chief Executive Officer, former Chief Operating Officer, and former Director of Public Relations resigned. Effective August 2, 2017, the Company’s Board of Directors and a majority of the shareholders of the Company amended the Company’s Articles of Incorporation to (i) change the name of the Company to International Leaders Capital Corporation and (ii) effect a 1-for-50 reverse common stock split. All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split.

 

The Company’s previous majority shareholders had planned to build Pandaho, a cartoon styled character, into a competitive cartoon brand in China and surrounding areas with Pandaho-themed merchandise and multi-media exhibitions. Commensurate with the shareholder transactions on May 28, 2017, the Company plans to operate a financial services firm which provides consulting services for businesses and training programs for general investors. The Company anticipates earning revenue from (1) business training and consulting and (2) jointly investing in quality projects and ventures for companies which we serve. Our professional investment education program commences with a three day intensive program for general investors which is further reinforced with monthly training courses. In addition, we offer a roadshow platform for OTC listed companies which guides clients through the fund raising process.

 

The Company’s headquarters are based in Las Vegas, Nevada with planned primary operation in mainland China and Asia.

 

Critical Accounting Policies and Estimates

 

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States, or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.

 

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties.

 

REVENUE

 

Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been delivered, and collectability is reasonably assured. In transactions in which the Company brokers a sale and determines that it was not the primary obligor in the arrangement, the Company records as net the commission earned from the transaction.

 

STOCK-BASED COMPENSATION

 

The Company may periodically issue shares of common stock, stock options, or warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the

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FASB whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company's common stock option grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

 

RESULTS OF OPERATIONS

 

FISCAL YEAR ENDED JUNE 30, 2017 COMPARED TO THE FISCAL YEAR ENDED JUNE 30, 2016

 

REVENUE

 

For the fiscal years ended June 30, 2017 and 2016, we had $0 revenue.

 

OPERATING COSTS

 

Compensation includes salaries, stock-based compensation expenses and benefits paid and payable to three former executives and one current executive of the Company, and a consultant/shareholder of the Company. Compensation expense was $717,873 for the year ended June 30, 2017, compared to $751,830 for the year ended June 30, 2016. For the year ended June 30, 2017, compensation expense included $236,353 for accrual of annual compensation due, and a charge of $481,520 for the fair value that could be paid in shares of common stock. For the year ended June 30, 2016, compensation expense included $396,000 for accrual of annual compensation due, and a charge of $355,830 for the fair value that could be paid in shares of common stock. The decrease in compensation expense is primarily to the termination of the employment agreements with the three former executives.

 

General and administrative expenses were $64,392 for the year ended June 30, 2017, compared to $249,555 for the year ended June 30, 2016. Administration comprise accounting, audit, legal and transfer agent costs related to SEC compliance and investor relation expenses. The decrease in general and administrative expenses is primarily due to decrease in payroll taxes and consulting fees.

 

OTHER INCOME (EXPENSE)

 

Other income (expense) includes interest expense of $56,774 and $118,504 for the year ended June 30, 2017 and 2016, respectively. The decrease in interest expense is due the debt discount on outstanding convertible notes being fully amortized.

 

Other income (expense) also includes a $65,000 loss on settlement of debt recorded in fiscal 2016 compared to $0 in fiscal 2017. On September 8, 2015, the Company issued 25,000 shares of Series B Preferred Stock in exchange for $44,787 due to Star Century Entertainment Corporation, a related party. The fair value of the Series B Preferred Stock was determined to be $109,787, and the difference of $65,000 was recorded as a loss on settlement of debt.

 

NET LOSS

 

Our net losses for the year ended June 30, 2017 and 2016 was $839,039 and 1,184,889, respectively. Our losses decreased in the current year primarily because of decrease in compensation expense.

 

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LIQUIDITY

 

As of June 30, 2017, we had cash of $92,004 and total liabilities of $722,314. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations.

 

The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended June 30, 2017, the Company incurred a net loss of $839,039 and used cash in operating activities of $52,089, and at June 30, 2017, had a stockholders’ deficiency of $621,143. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ending June 30, 2017, expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. Over the next 12 months, the Company expects to expend up to approximately $50,000 for legal, accounting and administrative costs. The Company’s officers or principal shareholders have committed to making advances or loans to pay for these legal, accounting, and administrative costs. The Company has not yet determined the amount of cash that will be necessary to fund its planned operations in China.

 

We hope to be able to attract suitable investors for our business plan. The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.

 

OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS

 

Our controlling shareholders expect to advance us additional funding for operating costs in order to implement our business plan. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the resources of our controlling shareholders. The loans from our controlling shareholders are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital once we are able to have our securities actively trading on a public exchange. There is no guarantee our stock will develop a market on that public exchange.

 

PLAN OF OPERATION AND FUNDING

We do not currently engage in enough business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with amounts to be loaned to or invested in us by our stockholders, management or other investors.

      During the next twelve months we anticipate incurring costs related to:

      (i) filing of Exchange Act reports, and

      (ii) costs relating to developing our business plan

12 
 

 

We believe we will be able to meet these costs through amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

  

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1 through F-13.

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being June 30, 2017. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2017 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). As a result of this assessment, management concluded that, as of June 30, 2017 our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

13 
 

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending June 30, 2018: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting identified in connection with the requisite evaluation that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

ITEM 9B.OTHER INFORMATION.

None.

PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The executive officers and directors of the Company as of September 20, 2017 are as follows:

  Name Age Position
  Cihan Huang 40 Chief Executive Officer, President and member of the Board of Directors
  Chang Wang 31 Chief Operating Officer, Secretary, Treasurer and member of the Board of Directors
  Michael Chi Chung Leung 57 Member of Board of Directors

 

Duties, Responsibilities and Experience

 

Biographical Information

 

Cihan Huang Mr. Huang is a full time Angel investor and a professional business speaker in China. He has spoken to more than 2 million people across the country, on different subjects, investing, Leadership, business model, marketing and selling etc. Mr. Huang has a strong interest in the language and culture of both Chinese and Western world, with superb English speaking skills and used to be the honorable president of Liyang Crazy English Education Group, which is the most famous training company in China. Mr. Huang has been long engaged in economics research and served as Vice Dean in Chinese Economy Institute, 2016-2017. Mr. Huang has served as Chairman of the Board of Directors of Guangzhou CIHAN Business Consulting Company Limited since 2008. He is Co-Founder of Shenzhen KAICI Fund Management Company Limited and served as a member of the Board of Directors from 2016 to present. From June 2015 to August 2015, he served as an executive director and Chief Executive Officer of Shenzhen CIHAN Internet Technology Company limited and from December 2015 to present he has served as Chairman of the Board of directors and chief executive officer. Since November 2015, Mr. Huang has served as General Manager and chairman of the Board of Directors of Shenzhen KAICI Financial Holding Group Co., Ltd. Since 2015, Mr. Huang has served as President and member of the Board of Directors of HONGKONG International Board Financial Investment Group Limited. From 2015 to 2016, he served as member of the Board of Directors of Shenzhen KAIMO VC Investment Corporation Limited and from 2016 to present he has served as General Manager and chairman of the Board of Directors.

 

14 
 

Chang Wang Ms. Wang has had almost 10 years of experience in corporate compliance and operation, as well as a professional background in investment and finance. She has passed both the National Judicial Examination, and the Securities Investment Analyst Examination. In 2014, she received her attorney’s license. The last two years, she run two funds of 180 million range and invested in non-listed companies’ equities. From 2008 to 2009, Ms. Wang served as a legal assistant with Guangdong Dawei Law Firm. From 2009 to 2011, she served as Secretary, member of the Board of Directors and Manager of Legal Affairs Department of Guangdong Hua Nan Shun Tong Bulk Commodities Co., Ltd. From 2011 to 2013, Ms. Wang was a Trainee Solicitor of Guangdong Ever Win Law Office Dongguan f/k/a Guangdong Saanen Law Firm. From 2013 to 2014, she served as Head of the Branch of Black Sea Capital Co., Ltd., Dongguan. From 2015 to 2016, Ms. Wang was Chief Investment Officer of Dongguan Securities Corporation Ltd and from 2017 to present she is a self-employed Angel Investor.

 

Michael Chi Chung Leung Mr. Leung is a business guru with tremendous international business experiences and markets development. He is well-versed in connecting, promoting and thrive at multi-cultural markets. He is a life-member of the Stanford Business School. He is equipped with an MBA degree and obtained executive education in different focuses across Continents. In 2012, upon the 15th Anniversary that Hong Kong returned her sovereignty to P.R. China, Mr. Leung is decorated with a special recognition: Bauhinia Award1997-2012. It is awarded to only Fifty-five leading Hong Kong figures for their profound contributions in socio and economic development overall between HK and the mainland China. The prestigious award put him as an effective "modem" to bridge the best between EAST & WEST. He shares his enthusiasm for executive management, business development and continuing education which exemplify stellar professionalism of himself in different market regions. He is globally business savvy and has achieved substantial business track records in U.S., Europe and Asia markets. From a senior executive with regional responsibility at Fortune 100's corporation, He has turned himself to become a successful entrepreneur and investor; fostering international business cooperations with in-depth exposure at cross-cultural environment. Mr. Leung is also a widely acclaimed Guest & Keynote Speaker at universities & Commentator at global business forum. He is a certified business consultant and corporate trainer which earned him substantial recognition in the industry. From 2001 to 2004, he served as Senior Director and eMarketing of Oracle Corporation, Asia Pacific. He is Co-Founder of Inspur Worldwide Services, China and served as Vice Chairman and Chief Executive Officer from 2005 to 2009. He is Co-Founder of Tresor House Group Ltd. and served as Chief Executive Officer from 2010 to 2016. Mr. Leung has been Executive Vice-Chairman of Hong Kong International Board Financial Investment Group Company Ltd. from 2017.

 

ITEM 11.EXECUTIVE COMPENSATION.

Summary of Cash and Certain Other Compensation 

The following table provides certain summary information concerning the compensation earned by the named executive officers for the fiscal years ended June 30, 2017 and 2016, for services rendered in all capacities to International Leaders Capital Corporation:

 

Name & Principal Position  Year  Salary ($)  Bonus
($)
  Stock Awards ($)  Option Awards ($)  Non-Equity Incentive Plan Compensation ($)  Nonqualified Deferred Compensation Earnings ($)  All Other Compensation ($)  Total ($)
Cihan Huang, Chief Executive Officer, President and Director
   2017   $2,000   $—     $—     $—     $—     $—     $—     $2,000 
    2016   $—     $—     $—     $—     $—     $—     $—     $—   
Chang Wang, Chief Operating Officer, Secretary, Treasurer and Director   2017   $—     $—     $—     $—     $—     $—     $—     $—   
    2016   $—     $—     $—     $—     $—     $—     $—     $—   
Fen Xing, Former Chief Executive Officer, Secretary, Treasurer and Director
   2017   $60,493   $—     $—     $—     $—     $—     $—     $60,493 
    2016   $120,000   $—     $—     $—     $—     $—     $—     $120,000 
                                              
Jian Zhang, Former Chief Operating Officer and Director
   2017   $60,493   $—     $—     $—     $—     $—     $—     $60,493 
    2016   $120,000   $—     $—     $—     $—     $—     $—     $120,000 
                                              
Yan Zhang, Former Director of Public Relations and Director
   2017   $48,395   $—     $—     $—     $—     $—     $—     $48,395 
    2016   $96,000   $—     $—     $—     $—     $—     $—     $96,000 

 

15 
 

 

Director Compensation

 

The following table provides compensation summary concerning the compensation earned by the named directors for the years ended June 30, 2017 and 2016.

 

Name  Year  Fees Earned or Paid in Cash  Stock Awards  Option Awards  Non-Equity Incentive Plan Compensation  Non-Qualified Deferred Compensation Earnings  All Other Compensation  Total
Cihan Huang, Chief Executive Officer, President and Director
   2017   $2,000   $—     $—     $—     $—     $—     $2,000 
    2016   $—     $—     $—     $—     $—     $—     $—   
Chang Wang, Chief Operating Officer, Secretary, Treasurer and Director   2017   $—     $—     $—     $—     $—     $—     $—   
    2016   $—     $—     $—     $—     $—     $—     $—   
Michael Chi Chung Leung, Director   2017   $—     $—     $—     $—     $—     $—     $—   
    2016   $—     $—     $—     $—     $—     $—     $—   
Fen Xing, Chief Former Executive Officer, Secretary, Treasurer and Director
   2017   $60,493   $—     $—     $—     $—     $—     $60,493 
    2016   $120,000   $—     $—     $—     $—     $—     $120,000 
                                         
Jian Zhang, Former Chief Operating Officer and Director
   2017   $60,493   $—     $—     $—     $—     $—     $60,493 
    2016   $120,000   $—     $—     $—     $—     $—     $120,000 
                                         
Yan Zhang, Former Director of Public Relations and Director
   2017   $48,395   $—     $—     $—     $—     $—     $48,395 
    2016   $96,000   $—     $—     $—     $—     $—     $96,000 

 

16 
 

 

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of September 22, 2017, information about the beneficial ownership of our capital stock with respect to each person known by International Leaders Capital Corporation to own beneficially more than 5% of the outstanding capital stock, each director and officer, and all directors and officers as a group.

  Number of Shares Beneficially Owned   Percentage of Class   (2)
Name and Address(1) Class
Cihan Huang, Chief Executive Officer, President and Director -- Common *
Chang Wang, Chief Operating Officer, Secretary, Treasurer and Director -- Common *
Michael Chi Chung Leung, Director -- Common *

All directors and executive

officers (3 persons)

--

 

Common

 

*
5% Holders      
Asia International Holdings Limited    400,000 Common  25.4%
Memory Hospitality Consultancy PTE Ltd. 395,650 Common 25.1%
Lui Li 238,000 Common 15.1%
ILC Holdings, LLC 200,000 Common 12.7%
Changsha 3D Technology Co., Ltd. 80,000 Common 5.1%
*Denotes less than 1%

 

1)Unless noted otherwise, the address for all persons listed is c/o the Company at 1980 Festival Plaza Drive, Suite 530, Las Vegas, Nevada 89135.
 2)The above percentages are based on 1,574,179 shares of common stock outstanding as September 20, 2017.

 

 “Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of or to direct the disposition of, a security).

There are no arrangements, known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of International Leaders Capital Corporation

There are no arrangements or understandings among members of both the former and the new control groups and their associates with respect to election of directors or other matters.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

None.

 

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed by the Company's auditors for the professional services rendered in connection with the audit of the Company's annual financial statements, review of our Form 10 and reviews of the financial statements included in the Company's Forms 10-Qs and Form 10-Ks for fiscal 2017 and 2016 were approximately $25,408 and $30,330, respectively.

Audit-Related Fees

None.

Tax Fees

None.

All Other Fees

None.

17 
 

 

PART IV.

 

ITEM 15.EXHIBITS.
      Incorporated by reference
Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date
3.1 Articles of Incorporation   10/A#2   3.1 11/5/2009
3.2 Bylaws   10/A #2   3.2 11/5/2009
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X        
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X        
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X        
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X        

 

18 
 

SIGNATURES

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  INTERNATIONAL LEADERS CAPITAL CORPORATION
     
     
Date:  September 26, 2017 By: /s/ Cihan Huang
   

Cihan Huang, Chief Executive Officer, President and Director

(Principal Executive Officer)

     
  By: /s/ Chang Wang
    Chang Wang, Chief Operating Officer, Secretary, Treasurer and Director (Principal Accounting and Financial Officer)

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

     
Date:  September 26, 2017 By: /s/ Cihan Huang
   

Cihan Huang, Chief Executive Officer, President and Director

(Principal Executive Officer)

     
  By: /s/ Chang Wang
    Chang Wang, Chief Operating Officer, Secretary, Treasurer and Director (Principal Accounting and Financial Officer)

 

 

 

19 
 

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

Index to Financial Statements

  

  Page
Report of Independent Registered Public Accounting Firm F-2
Balance Sheets as of June 30, 2017 and 2016 F-3
Statements of Operations for the years ended June 30, 2017 and 2016 F-4
Statement of Stockholders’ Deficiency for the years ended June 30, 2017 and 2016 F-5
Statements of Cash Flows for the years ended June 30, 2017 and 2016 F-6
Notes to Financial Statements for the years ended June 30, 2017 and 2016 F-7

 

 

 

 

 

F-1 
 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders

International Leaders Capital Corporation (formerly Star Century Pandaho Corporation),

 

We have audited the accompanying balance sheets of International Leaders Capital Corporation (formerly Star Century Pandaho Corporation) (the “Company”) as of June 30, 2017 and 2016, and the related statements of operations, stockholders’ deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of International Leaders Capital Corporation (formerly Star Century Pandaho Corporation) as of June 30, 2017 and 2016, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring losses from operations and used cash in operating activities since inception, and has a stockholders’ deficiency at June 30, 2017. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

 

/s/Weinberg & Company, P.A.

Los Angeles, California

September 26, 2017

 

  

 

F-2 
 

 

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

BALANCE SHEETS

 

   June 30,  June  30,
   2017  2016
Assets          
Current assets:          
Cash  $92,004   $920 
Prepaid expenses   9,167    9,167 
Total current assets  $101,171   $10,087 
           

Liabilities and Stockholders’ Deficiency

 

          
Current Liabilities:          
Accounts payable and accrued liabilities  $117,966   $105,663 
Accrued compensation-related party   255,821    918,065 
Advances (including $36,000 and $25,000 due to related parties at June 30, 2017 and 2016, respectively)   90,390    79,390 
Convertible notes – related party, net of discount of $1,781 and $34,942 at June 30, 2017 and 2016, respectively   214,957    131,639 
Total current liabilities   679,134    1,234,757 
           
Commitments and contingencies          
           
Non-redeemable convertible note – related party   43,180    42,551 
           
Stockholders' Deficiency:          
    Preferred stock; par value $0.01; 48,900,000 shares authorized;  no shares issued and outstanding   —      —   
    Series A Convertible Preferred Stock; par value $0.01; 1,000,000 shares authorized; no shares issued and outstanding   —      —   
    Series B Preferred Stock; par value $0.01; 100,000 shares authorized; 25,000 shares issued and outstanding at June 30, 2017 and 2016   250    250 
    Common stock; par value $0.001; 250,000,000 shares authorized; 1,574,179 and 1,374,179 shares issued and outstanding at June 30, 2017 and 2016, respectively   1,574    1,374 
Additional paid-in capital   120,830,251    119,345,334 
Notes receivable   (5,000,000)   (5,000,000)
Accumulated deficiency   (116,453,218)   (115,614,179)
Total stockholders' deficiency   (621,143)   (1,267,221)
Total liabilities and stockholders’ deficiency  $101,171   $10,087 
           

See accompanying notes

 

 

 

F-3 
 

 

 

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

STATEMENTS OF OPERATIONS

  

 

Year ended

June 30, 2017

 

 

Year ended

June 30, 2016

       
       
Revenue  $—     $—   
           
Operating costs:          
Compensation–related party   717,873    751,830 
General and administrative (including related party share -based compensation of $0 and $153,993)   64,392    249,555 
Total operating expenses   782,265    1,001,385 
           
Loss from operations   (782,265)   (1,001,385)
           
Other expenses:          
Interest expense   (56,774)   (118,504)
Loss on settlement of debt   —      (65,000)
    (56,774)   (183,504)
Net loss  $(839,039)  $(1,184,889)
           
Net loss per share - basic and diluted  $(0.61)  $(0.86)
           
Weighted average number of common shares outstanding - basic and diluted   1,380,205    1,370,713 
           

See accompanying notes

 

 

F-4 
 

See accompanying notes

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

STATEMENT OF STOCKHOLDERS' DEFICIENCY

 

   Common
Shares
  Common
Stock
  Series B Preferred Shares  Series B Preferred Stock  Additional Paid-in Capital  Accumulated
Deficit
  Note
Receivable
  Total Stockholders’
Deficiency
Balance July 1, 2015   1,365,053   $1,365    —     $   $118,828,320   $(114,429,290)  $(5,000,000)  $(599,605)
                                         
Fair value of Series B Preferred Shares issued for settlement of debt-related party   —      —      25,000    250    109,537    —      —      109,787 
Beneficial conversion feature of issued convertible notes-related party   —      —      —      —      133,493    —      —      133,493 
Fair value of shares issued for settlement  of compensation payable-related party   3,997    4    —      —      119,996    —      —      120,000 
Fair value of shares issued for services-related party   5,129    5    —      —      153,988    —      —      153,993 
Net loss   —      —      —      —      —      (1,184,889)   —      (1,184,889)
Balance June 30, 2016   1,374,179    1,374    25,000    250    119,345,334    (115,614,179)   (5,000,000)   (1,267,221)
Beneficial conversion feature on issuance of convertible note payable-related party   —      —      —      —      5,000    —      —      5,000 
Gain on settlement of accrued compensation–related party treated as a capital contribution   —      —      —      —      1,380,117    —      —      1,380,117 
Shares issued for cash-related party   200,000    200    —      —      99,800    —      —      100,000 
Net loss   —      —      —      —      —      (839,039)   —      (839,039)
Balance June 30, 2017   1,574,179   $1,574    25,000   $250   $120,830,251   $(116,453,218)  $(5,000,000)  $(621,143)
                                         

See accompanying notes

 

F-5 
 

  

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

STATEMENTS OF CASH FLOWS

 

  

 

Year Ended
June 30, 2017

 

 

Year Ended
June 30, 2016

Cash Flows from Operating Activities:          
Net loss  $(839,039)  $(1,184,889)
Adjustments to reconcile net loss to net cash used in operating activities and liabilities:          
Accrued interest-related party   18,613    19,953 
Amortization of debt discount-related party   38,161    98,551 
    Fair value of shares issued for services-related party   —      153,993 
    Loss on settlement of debt-related party   —      65,000 
Changes in operating assets and liabilities:          
Prepaid expenses   —      1,800 
Accounts payable and accrued expenses   12,303    49,205 
Accrued compensation-related parties   717,873    699,527 
Net cash used in operating activities   (52,089)   (96,860)
           
Cash Flows from Financing Activities:          
   Proceeds from issuance of convertible notes-related parties   32,173    144,381 
   Proceeds from advances-related party   11,000    —   
   Proceeds from sale of shares-related party   100,000    —   
   Payment made on non-redeemable convertible note   —      (61,892)
Net cash provided by financing activities   143,173    82,489 
           
Net change in cash   91,084    (14,371)
Cash beginning of year   920    15,291 
Cash end of year  $92,004   $920 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Cash paid during period for:          
   Interest paid  $—     $—   
   Income tax paid  $—     $—   
NON-CASH FINANCING ACTIVITIES          
Issuance of Series B Preferred Stock in settlement of advance due to a shareholder  $—     $44,787 
Beneficial conversion feature associated with issued convertible notes-related party  $5,000   $133,493 
Issuance of shares of common stock to settle compensation payable-related party  $—     $120,000 
Reclassification of  advances to convertible notes  $—     $10,200 
Gain on settlement of accrued compensation–related party treated as a capital contribution  $1,380,117   $—   

See accompanying notes

 

F-6 
 

INTERNATIONAL LEADERS CAPITAL CORPORATION

(formerly Star Century Pandaho Corporation)

Notes to Financial Statements

For the years ended June 30, 2017 and 2016

 

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

International Leaders Capital Corporation (formerly Star Century Pandaho Corporation) ("the Company", “SCPD”) was organized under the laws of the State of Nevada on May 21, 2009. The Company was established as part of the Chapter 11 reorganization of AP Corporate Services, Inc. ("AP").

 

On May 28, 2017, Star Century Entertainment Corporation, a shareholder of the Company, agreed to sell 25,000 shares of the Company’s Series B preferred shares, representing approximately 99% of the voting control of the Company, to ILC Holdings, LLC, an unrelated third party, and the Company experienced a change in control. At May 28, 2017, ILC Holdings, LLC did not have any operations and had minimal assets and liabilities. In conjunction with the change in control, three individuals were elected to be the Company’s management, and the Company’s former Chief Executive Officer, former Chief Operating Officer, and former Director of Public Relations resigned. Effective August 2, 2017, the Company’s Board of Directors and a majority of the shareholders of the Company amended the Company’s Articles of Incorporation to (i) change the name of the Company to International Leaders Capital Corporation and (ii) effect a 1-for-50 reverse common stock split. All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split.

 

The Company’s previous majority shareholders had planned to build Pandaho, a cartoon styled character, into a competitive cartoon brand in China and surrounding areas with Pandaho-themed merchandise and multi-media exhibitions. Commensurate with the shareholder transactions on May 28, 2017, the Company plans to operate a financial services firm which provides consulting services for businesses and training programs for general investors. The Company anticipates earning revenue from (1) business training and consulting and (2) jointly investing in quality projects and ventures for companies which we serve.

 

The Company’s headquarters are based in Las Vegas, Nevada with planned primary operation in mainland China and Asia.

 

GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended June 30, 2017, the Company incurred a net loss of $839,039 and used cash in operating activities of $52,089, and at June 30, 2017, had a stockholders’ deficiency of $621,143. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. Over the next 12 months, the Company expects to expend up to approximately $50,000 for legal, accounting and administrative costs. The Company’s officers or principal shareholders have committed to making advances or loans to pay for these legal, accounting, and administrative costs.

 

The Company hopes to be able to attract suitable investors for our business plan, which will not require us to use our cash. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing.

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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 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. The more significant estimates and assumptions by management include, among others, the accrual of potential liabilities, the assumptions used in valuing share-based instruments issued for services, and the valuation allowance for deferred tax assets.

 

CASH AND CASH EQUIVALENTS

 

Investments with original maturities of three months or less are considered to be cash equivalents.

 

INCOME TAXES

 

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized as income (loss) in the period that includes the enactment date.

 

REVENUE

 

Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been delivered, and collectability is reasonably assured. In transactions in which the Company brokers a sale and determines that it was not the primary obligor in the arrangement, the Company records as net the commission earned from the transaction.

 

BASIC AND DILUTED LOSS PER SHARE

 

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive.

 

At June 30, 2017 and 2016, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive:

 

   June 30,
2017
  June 30,
2016
Common stock issuable upon conversion of convertible and non-redeemable convertible notes payable   5,378,010    2,516,830 
Common stock issuable upon conversion of accrued compensation   240,821    289,073 
Total   5,618,831    2,805,903 

 

STOCK-BASED COMPENSATION

 

The Company may periodically issue shares of common stock, stock options, or warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the FASB whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

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The fair value of the Company's common stock option grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The estimated fair value of certain financial instruments, including cash and cash equivalents and accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of the convertible notes-related parties and non-redeemable convertible note approximates their fair values based upon their effective interest rates.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. In addition, during 2016 the FASB has issued ASU 2016-08, ASU 2016-10 and ASU 2016-12, all of which clarify certain implementation guidance within ASU 2014-09, and ASU 2016-11, which rescinds certain SEC guidance effective upon an entity’s adoption of ASU 2014-09. 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. The standard can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

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In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

NOTE 2. COMPENSATION AND ACCRUED COMPENSATION-RELATED PARTY

 

Compensation-related party and accrued compensation-related party represent compensation due to three former executives and one current executive, and due to a shareholder consultant. Pursuant to the terms of employment agreements, the executives and shareholder consultant have the option to accept shares of the Company’s common stock in lieu of cash based on a 50% discount to the average stock price, as defined. The option to accept shares of common stock in lieu of cash is accounted for at the fair value of the potentially issuable common shares and is subject to adjustment at each reporting date based on the change in market value of the shares.

 

On June 30, 2016, accrued compensation related to the three former executives totaled $812,775. From July 1, 2016 to December 31, 2016, additional compensation expense of $567,342 was recorded, including $169,380 accrual of cash compensation, and a charge of $397,962 for the fair value that could be paid in shares of common stock. At December 31, 2016, accrued compensation due to the three former executives totaled $1,380,117. Effective December 31, 2016, the three former executives agreed to forgive the $1,380,117, and to also terminate their employment agreements. Accordingly, at June 30, 2017, the total due to the three former executives for accrued compensation was zero. The Company determined that based on the related party nature of the settlement, the gain on settlement of accrued compensation was treated as a capital contribution.

 

On June 30, 2016, accrued compensation due to the shareholder consultant was $105,290. During the ten months ended April 30, 2017, additional compensation of $146,531 was recorded, including $64,973 accrual of cash compensation due, and a charge of $81,558 for the fair value that could be paid in shares of common stock. On April 30, 2017, the consulting agreement with the shareholder consultant was terminated and the shareholder consultant entered into a new consulting agreement whereby the Company agreed to pay $7,500 per month in cash for consulting services through December 31, 2017. At April 30, 2017 and June 30, 2017, the accrued compensation due to the shareholder consultant under the former agreement was $236,821, which if the shareholder consultant elected to be paid in shares of common stock, would result in the issuance of 236,821 shares of the Company’s common stock. In addition, at June 30, 2017, accrued compensation due to the shareholder consultant under the new agreement was $15,000.

 

Effective June 1, 2017, the Company entered in an employment agreement with the current executive for annual compensation of $24,000. The executive has the option to accept shares of the Company’s common stock in lieu of cash based on a 50% discount to the average stock price, as defined. For the year ended June 30, 2017, compensation expense of $4,000 was recorded, including $2,000 accrual of cash compensation and a charge of $2,000 for the fair value that could be paid in shares of common stock related to this employment agreement. At June 30, 2017, the accrued compensation due to the executive was $4,000, which if the shareholder consultant elected to be paid in shares of common stock, would result in the issuance of 4,000 shares of the Company’s common stock.

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NOTE 3. ADVANCES

 

The Company from time to time borrows from its principal shareholders, or others, to pay expenses such as filing fees, accounting fees and legal fees. These advances are non-interest bearing, unsecured, and generally due upon demand. At June 30, 2017 and 2016, the Company was obligated for the following advances:

 

   June 30,
2017
  June 30,
2016
Advances due to shareholder  $36,000   $25,000 
Advances due to unrelated parties   54,390    54,390 
   $90,390   $79,390 

  

NOTE 4. CONVERTIBLE NOTES-RELATED PARTIES

 

   June 30,  
2017
  June 30,
2016
Balance due on convertible notes  $216,738   $166,581 
Unamortized note discounts   (1,781)   (34,942)
   $214,957   $131,639 

 

Convertible notes-related party are unsecured, accrue interest at 10% per annum, and are due from August 2017 through March 2018. The notes are convertible into shares of the Company’s common stock at a conversion price ranging from of $0.01 per share to $0.10 per share. At June 30, 2017, the notes are convertible into 4,514,410 shares of common stock. At June 30, 2016, principal and accrued interest totaled $166,581. During the year ended June 30, 2017, the Company issued five convertible notes for total proceeds of $32,173, and accrued interest of $18,115 was added the balance due. At June 30, 2017, principal and accrued interest totaled $216,738.

 

At June 30, 2016, the unamortized discount on convertible notes was $34,942. During the year ended June 30, 2017, $5,000 of discount was added for the beneficial conversion feature on issuance of a convertible note payable, and $38,161 of discount was amortized and included in interest expense. At June 30, 2017, the unamortized discount on convertible notes is $1,781, and is to be amortized through December 2017.

 

NOTE 5. NON-REDEEMABLE CONVERTIBLE NOTE

 

Non-redeemable convertible note-related party is secured by all the assets of the Company, accrues interest at 20% per annum, and is due August 1, 2017. The Company may prepay the note in readily available funds at any time prior to the maturity date. The Company has the right to convert the note into shares of the Company’s common stock at any time prior to the maturity date at a fixed price of $0.05 per share of common stock. At June 30, 2016, principal and accrued interest totaled $42,551. During the year ended June 30, 2017, interest of $629 was accrued and added to principal. At June 30, 2017, principal and accrued interest totaled $43,180 and are convertible into 863,600 shares of common stock. As it is the Company’s choice to convert the note into shares of the Company’s common stock or to pay the note in cash, the note is presented below current liabilities on the accompanying balance sheets.

 

NOTE 6. STOCKHOLDERS' DEFICIENCY

 

Series B Preferred stock

 

In 2015, the Company filed a Certificate of Designation designating the rights and restrictions of 100,000 shares of Series B Preferred stock, par value $0.01 pursuant to resolutions approved by the Company’s Board of Directors on June 11, 2015.

 

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The holders of Series B Preferred stock are entitled to vote together with the holders of common stock, as a single class, upon all matters submitted to holders of common stock for a vote. Each share of Series B Preferred Stock has the voting power of 5,000 shares of common stock. The Series B Preferred stock is not convertible into common stock. In the event of any liquidation, dissolution or winding up of the Company, Series B Preferred stock shall have a liquidation preference to the common stock in the amount of par value per share.

 

During the year ended June 30, 2016, the Company issued 25,000 shares of Series B Preferred Stock in exchange for $44,787 due to Star Century Entertainment Corporation, a related party shareholder. The fair value of the Series B Preferred Stock as determined by a third party valuation expert was determined to be $109,787. The difference between the fair value of Series B Preferred Stock of $109,787 and the $44,787 debt settled of $65,000 is recorded as a loss on settlement of debt in the accompany statement of operations.

 

During the year ended June 30, 2017, Star Century Entertainment Corporation agreed to sell the 25,000 shares of the Company’s Series B preferred shares to ILC Holdings, LLC, an unrelated third party (see Note 1). At June 30, 2017, there were 1,574,179 shares of common stock outstanding. Based on the voting rights of the Series B Preferred stock of 125,000,000 shares of common stock, ILC Holdings, LLC has the ability to elect our directors and determine the outcome of votes by our stockholders on corporate matters, including mergers, sales of our assets, charter amendments and other matters requiring stockholder approval.

 

Common stock

 

During the year ended June 30, 2016, the Company issued 456,274 shares of common stock valued at $273,933 to Mr. Peter Chin, a shareholder. 199,833 shares of common stock were issued to settle compensation payable of $120,000, and the balance of 256,441 shares of common stock, valued at $153,993, was recognized as stock compensation expense.

 

During the year ended June 30, 2017, the Company issued 200,000 shares of common stock for cash proceeds of $100,000.

 

NOTE 7. INCOME TAXES

 

For the years ended June 30, 2017 and 2016, our net losses were $835,039 and $1,184,889, respectively, and no provision for income taxes was recorded. We made no provision for income taxes due to our utilization of federal net operating loss carry forwards to offset both regular taxable income and alternative minimum taxable income.

 

Income taxes differ from the amount that would be computed by applying the Federal statutory income tax rates of 34% as follows:

 

   Year ended
June 30 2017
  Year ended
June 30 2016
Provision for income taxes:          
Net loss  $(839,039)  $(1,184,889)
Adjustments:          
Amortization of debt discount   38,161    98,551 
Share based compensation   —      273,993 
    (800,878)   (812,345)
   Federal statutory income tax rate   34%   34%
   Income tax expense (benefit)   (272,299)   (276,197)
  Change in valuation allowance   272,299    276,197 
   $—     $—   

 

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Deferred tax assets and liabilities consist of the following as of June 30:

 

   2017  2016
Deferred tax assets:          
Net operating loss carry forwards  $773,688   $501,389 
Less valuation allowance   (773,668)   (501,389)
   Net deferred tax asset  $—     $—   

The Company has provided a valuation allowance on the deferred tax assets at June 30, 2017 and 2016 to reduce such asset to zero, since there is no assurance that the Company will generate future taxable income to utilize such asset. Management will review this valuation allowance requirement periodically and make adjustments as warranted. The net change in the valuation allowance for the year ended June 30, 2017 was an increase of $272,299.

 

The Company has net operating loss carryforwards of approximately $2.2 million for federal purposes available to offset future taxable income that expire in varying amounts through 2036. The ability to utilize the net operating loss carry forwards could be limited by Section 382 of the Internal Revenue Code which limits their use if there is a change in control (generally a greater than 50% change in ownership). The Company is subject to examination by tax authorities for all years for which a loss carry forward is utilized in subsequent periods.

 

The Company follows FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of June 30, 2017 and 2016, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption. The tax years 2011 through 2016 remain open to examination by the major taxing jurisdictions in which the Company operate

 

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of June 30, 2017 and 2016, the Company has no accrued interest or penalties related to uncertain tax positions.

 

NOTE 8. SUBSEQUENT EVENTS

 

On August 2, 2017, the directors and a majority of the stockholders of the Company approved the following resolutions to change the name of the Corporation to International Leaders Capital Corporation, and effect a reverse stock split of all the Company’s outstanding common stock at a ratio of fifty to one (50 to 1). All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split.

 

On August 16, 2017, the Company issued a convertible note payable for $105,000, bearing interest at 8% per annum, and maturing on August 15, 2018. At the option of the holder, on or before December 31, 2017, the note is convertible into shares of common stock of the Company at a price per share discount of 50% of the lowest closing market price of the Company’s common stock for the ten trading days preceding a conversion notice. The Company determined that the conversion feature of the note was not fixed, and will record the fair value of the conversion feature of approximately $200,000 as a derivative liability.

 

 

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