Amended Quarterly Report (10-q/a)

Date : 05/16/2019 @ 10:04AM
Source : Edgar (US Regulatory)
Stock : Kibush Capital Corp (PC) (DLCR)
Quote : 0.0005  0.0 (0.00%) @ 12:29PM

Amended Quarterly Report (10-q/a)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

Amendment No. 1

 

[X] QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019
   
  OR
   
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-55256

 

Kibush Capital Corp.

(Exact Name of Small Business Issuer as specified in its charter)

 

Nevada

(State or other Jurisdiction of Incorporation or Organization)

 

c/o CSC Services of Nevada, Inc.

2215-B Renaissance Drive

Las Vegas, Nevada 89119

(Address of principal executive offices)

 

+(61) 398464288

(Issuer’s telephone number, including area code)

 

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 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 (SS 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 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 if the Exchange Act.

 

Large Accelerated Filer [  ]   Accelerated Filer [  ]
Non-accelerated Filer (Do not check if smaller reporting company) [  ]   Smaller Reporting Company [X]

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 3, 2019, there were 443,354,541 shares of the registrant’s common stock outstanding and 23,000,000 shares of the registrant’s preferred stock.

 

 

 

     
 

 

EXPLANATORY NOTE

 

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 of Kibush Capital Corporation (the “Company”) filed with the Securities and Exchange Commission on May 14, 2019 (the “Form 10-Q”) is to furnish Exhibits 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.

 

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

 

 
 

 

CAUTIONARY NOTE REGARDING EXPLORATION STAGE STATUS

 

We are considered an “exploration stage” company under the U.S. Securities and Exchange Commission (“SEC”) Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations (“Industry Guide 7”), because we do not have reserves as defined under Industry Guide 7. Reserves are defined in Guide 7 as that part of a mineral deposit which can be economically and legally extracted or produced at the time of the reserve determination. The establishment of reserves under Guide 7 requires, among other things, certain spacing of exploratory drill holes to establish the required continuity of mineralization and the completion of a detailed cost or feasibility study.

 

Because we have no reserves as defined in Industry Guide 7, we have not exited the exploration stage and continue to report our financial information as an exploration stage entity as required under Generally Accepted Accounting Principles (“GAAP”). Although for purposes of FASB Accounting Standards Codification Topic 915, Development Stage Entities, we have exited the development stage and no longer report inception to date results of operations, cash flows and other financial information, we will remain an exploration stage company under Industry Guide 7 until such time as we demonstrate reserves in accordance with the criteria in Industry Guide 7.

 

Because we have no reserves, we have and will continue to expense all mine construction costs, even though these expenditures are expected to have a future economic benefit in excess of one year. We also expense our reclamation and remediation costs at the time the obligation is incurred. Companies that have reserves and have exited the exploration stage typically capitalize these costs, and subsequently amortize them on a units-of-production basis as reserves are mined, with the resulting depletion charge allocated to inventory, and then to cost of sales as the inventory is sold. As a result of these and other differences, our financial statements will not be comparable to the financial statements of mining companies that have established reserves and have exited the exploration stage.

 

FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended

 

 
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

March 31, 2019

C O N T E N T S

 

Condensed Consolidated Statements of Operations 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Condensed Consolidated Statement of Stockholders’ Deficit 6
Notes to Condensed Consolidated Financial Statements 7

 

  - 2 -  
 

 

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

 

    Quarter ended
March 31,
    Quarter ended
March 31,
    6 months ended
March 31,
    6 months ended
March 31,
 
    2019     2018     2019     2018  
Net revenues   $ 34,748     $ 18,084     $ 85,178     $ 48,063  
Cost of sales     -42,365       -47,608       -85,095       -89,091  
Gross profit     7,617       -29,524       83       -41,028  
                                 
Operating expenses:                                
General and administrative                                
General and administrative     127,778       112,851       228,724       239,050  
Total operating expenses     127,778       112,851       228,724       239,050  
Profit/Loss from operations     -135,395       -142,375       -228,641       -280,078  
                                 
Other income (expense):                                
Interest income     -       -       -       -  
Amortisation of Debt Discount     -       -       -       -  
Interest expense     -24,793       -37,905       -50,138       -63,172  
Other income     -       -       -       -  
Change in fair value of derivative liabilities     1,332       278,066       23,432       437,251  
Total other expense, net     -23,461       240,161       -26,706       374,079  
Profit/Loss before provision for income taxes     -158,856       97,786       -255,347       94,001  
Provision for income taxes     -       -       -       -  
Net profit/loss from operations     -158,856       97,786       -255,347       94,001  
Less: Loss attributable to non-controlling interest     6,910       7,645       9,976       14,942  
Net profit/loss attributable to Holding Company   $ -151,946   $ 105,431     $ -245,371   $ 108,943  
                                 
Basic and diluted loss per common share   $ 0.00     $ 0.00     $ 0.00     $ 0.00  
Weighted average common shares outstanding basic and diluted     233,177,226       186,657,041       233,177,226       186,657,041  

 

  - 3 -  
 

 

INTERIM CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

    March 31,     September 30,  
    2019     2018  
ASSETS                
Current assets:                
Cash   $ 2,201     $ 2,155  
Trade Debtors     17,253       5,781  
Total current assets     19,454       7,936  
                 
Property and equipment, net     105,951       112,612  
Other assets     52,320       50,171  
Total assets   $ 177,725     $ 170,718  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
Current liabilities:                
Accounts payable     -       -  
Accrued expenses     778,221       611,899  
Convertible notes payable     91,166       91,166  
Loan from related party     1,857,029       1,737,566  
Derivative liabilities     703,439       726,871  
Total current liabilities     3,429,855       3,167,502  
                 
Stockholders’ deficit:                
Preferred stock, $0.001 par value; 50,000,000 shares authorized; 23,000,000 shares issued and outstanding at March 31, 2019 and 23,000,000 shares issued and outstanding at September 30, 2018     23,000       23,000  
Common stock, $0.001 par value; 975,000,000 shares authorized at March 31, 2019 and September 30, 2018; 443,354,541     443,355       443,355  
Additional paid-in capital     9,842,517       9,842,517  
Accumulated deficit     -13,445,097       -13,199,727  
Total stockholders’ deficit, including non-controlling interest     -3,136,225       -2,890,855  
Non-Controlling interest     -115,905       -105,929  
Total stockholders’ deficit     -3,252,130       -2,996,784  
Total liabilities and stockholders’ deficit   $ 177,725     $ 170,718  

 

  - 4 -  
 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

    6 months ended
March 31
    6 months ended
March 31,
 
    2019     2018  
Operating Activities:                
Net loss   $ -245,371   $ 108,942  
                 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
Depreciation and amortization     6,679       8,509  
Change in fair value of derivative instruments     -23,432       -437,251  
Changes in operating assets and liabilities:                
Others asset     -       -  
Accounts receivable     -12,282       17,281  
Accrued expenses     125,000       62,500  
Accrued interest     50,138       37,905  
Deposits     -       -  
Net cash used in operating activities     -99,268       -202,114  
                 
Investing Activities:                
Purchase of property and equipment     -       -3,153  
Net cash used in investing activities     -       -3,153  
Financing Activities:                
Proceeds from related party loans, net of debt discounts     117,183       213,388  
Effective of exchange rates on cash     -17,869       -11,253  
Net cash provided by financing activities     99,314       202,135  
Net change in cash     46       -3,132  
Cash, beginning of period     2,155       5,784  
Cash, end of period   $ 2,201     $ 2,652  

 

  - 5 -  
 

 

KIBUSH CAPITAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

for the period SEPTEMBER 30, 2018, December 31, 2018 and March 31, 2019 (Unaudited)

 

    Common Stock     Preferred Stock     Paid In     Non Controlling     Accumulated     Accumulated Other Comprehensive     Stockholders  
    Shares     Amount     Shares     Amount     Capital     Interest     Deficit     Income     Deficit  
Balance at September 30, 2017     3,959,541       3,960       23,000,000       23,000       9,467,573       -74,541       -13,245,316       -       -3,825,324  
                                                                         
Common stock issued for repayment of convertible note     439,395,000       439,395       -       -       -120,056       -       -       -       319,339  
                                                                         
Class B Preferred stock issued for repayment of back salary (29.11.16) adjustment     -       -       -       -       145,000       -       -       -       145,000  
Write back accruals     -       -       -       -       350,000       -       -       -       350,000  
Exchange rate variation     -       -       -       -       -       -       -       -       -  
Net loss     -       -       -       -       -       -31,388       45,589       -       14,201  
                                                                         
Balance at September 30, 2018     443,354,541       443,355       23,000,000       23,000       9,842,517       -105,929       -13,199,727       -       -2,996,784  
                                                                         
Exchange rate variation     -       -       -       -       -       1               -       1  
Net loss     -       -       -       -       -       -3,066       -93,425       -       -96,491  
                                                                         
Balance at December 31, 2018     443,354,541       443,355       23,000,000       23,000       9,842,517       -108,994       -13,293,152       -       -3,093,274  
                                                                         
Exchange rate variation     -       -       -       -       -       -1       1       -       -  
Net loss     -       -       -       -       -       -6,910       -151,946       -       -158,856  
                                                                         
Balance at March 31, 2019     443,354,541       443,355       23,000,000       23,000       9,842,517       -115,905       -13,445,097       -       -3,252,130  

 

  - 6 -  
 

 

NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Business

 

Kibush Capital Corporation (formerly David Loren Corporation) (the “Company”) includes its 90% owned subsidiary Aqua Mining (PNG). See Basis of Presentation below. The Company has two primary businesses: (i) mining exploration within Aqua Mining, and (ii) timber operations in Papua New Guinea by Aqua Mining.

 

Basis of Presentation

 

The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

 

The consolidated financial statements of the Company include the accounts of the Company, and all entities in which a direct or indirect controlling interest exists through voting rights or qualifying variable interests. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

 

Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended September 30, 2018.

 

Change in Fiscal Year End

 

The Company’s fiscal year end is from October 1 to September 30 of each year.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As at March 31, 2019, the Company has an accumulated deficit of $13,445,097 and $13,199,727 as of September 30, 2018 and has not earned sufficient revenues to cover operating costs since inception and has a working capital deficit. The Company intends to fund its mining exploration through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year.

 

The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue mining exploration and execution of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings.

 

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Functional and Reporting Currency

 

The consolidated financial statements are presented in U.S. Dollars. The Company’s functional currency is the U.S. Dollar. The functional currency of Aqua Mining is the Papua New Guinean kina. Assets and liabilities are translated using the exchange rate on the respective balance sheet dates. Items in the income statement and cash flow statement are translated into U.S. Dollars using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded as a separate component of other comprehensive income/(loss) within stockholders’ equity.

 

The functional currency of foreign entities is generally the local currency unless the primary economic environment requires the use of another currency. Gains or losses arising from the translation or settlement of foreign-currency-denominated monetary assets and liabilities into the functional currency are recognized in the income in the period in which they arise. However, currency differences on intercompany loans that have the nature of a permanent investment are accounted for as translation differences as a separate component of other comprehensive income/(loss) within stockholders’ equity.

 

  - 7 -  
 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A summary of the principal accounting policies are set out below:

 

Cash

 

The Company maintains its cash balances in interest and non-interest bearing accounts which do not exceed Federal Deposit Insurance Corporation limits.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Kibush Capital and Aqua Mining. All intercompany accounts and transactions have been eliminated.

 

Other Comprehensive Income and Foreign Currency Translation

 

FASB ASC 220-10-05, Comprehensive Income , establishes standards for the reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distribution to owners.

 

The accompanying consolidated financial statements are presented in United States dollars.

 

Use of Estimates

 

The preparation of financial statements in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”) requires management to make certain 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. Significant estimates made by management are, recoverability of long-lived assets, valuation and useful lives of intangible assets, valuation of derivative liabilities, and valuation of common stock, options, warrants and deferred tax assets. Actual results could differ from those estimates.

 

Non-Controlling Interests

 

Investments in associated companies over which the Company has the ability to exercise significant influence are accounted for under the consolidation method, after appropriate adjustments for intercompany profits and dividends.

 

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” It requires an acquirer to recognize, at the acquisition date, the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their full fair values as of that date. In a business combination achieved in stages (step acquisitions), the acquirer will be required to re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss in earnings. The acquisition-related transaction and restructuring costs will no longer be included as part of the capitalized cost of the acquired entity but will be required to be accounted for separately in accordance with applicable generally accepted accounting principles. U.S. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

 

A non-controlling interest in a subsidiary is an ownership interest in a consolidated entity that is reported as equity in the consolidated financial statements and separate from the Company’s equity. In addition, net income/(loss) attributable to non-controlling interests is reported separately from net income attributable to the Company in the consolidated financial statements. The Company’s consolidated statements present the full amount of assets, liabilities, income and expenses of all of our consolidated subsidiaries, with a partially offsetting amount shown in non-controlling interests for the portion of these assets and liabilities that are not controlled by us.

 

Property and Equipment

 

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives as follows:

 

Plant equipment 2 to 15 years
Motor Vehicle 4 to 15 years

 

  - 8 -  
 

 

Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are reflected in the consolidated statement of operations.

 

Impairment of Long-Lived Assets

 

In accordance with FASB ASC 360-10-5, Accounting for the Impairment or Disposal of Long-Lived Assets , the Company evaluates the carrying value of its long-lived assets for impairment whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The Company uses its best judgment based on the current facts and circumstances relating to its business when determining whether any significant impairment factors exist. The Company considers the following factors or conditions, among others, that could indicate the need for an impairment review:

 

  Significant under performance relative to expected historical or projected future operating results;
  Significant changes in its strategic business objectives and utilization of the assets;
  Significant negative industry or economic trends, including legal factors;

 

If the Company determines that the carrying values of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company’s management performs an undiscounted cash flow analysis to determine if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the asset’s carrying amount and its fair value, and the impairment is charged to operations in the period in which the long-lived asset impairment is determined by management.

 

The carrying value of the Company’s investment in Joint Venture contract with leaseholders of certain Mining Leases in Papua New Guinea represents its ownership, accounted for under the equity method. The ownership interest is not adjusted to fair value on a recurring basis. Each reporting period the Company assesses the fair value of the Company’s ownership interest in Joint Venture in accordance with FASB ASC 325-20-35. Each year the Company conducts an impairment analysis in accordance with the provisions within FASB ASC 320-10-35 paragraphs 25 through 32.

 

Fair Value of Financial Instruments

 

The carrying amounts of the Company’s cash, accounts payable and accrued expenses approximate their estimated fair values due to the short-term maturities of those financial instruments. The Company believes the carrying amount of its notes payable approximates its fair value based on rates and other terms currently available to the Company for similar debt instruments

 

Beneficial Conversion Features of Debentures

 

In accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of debentures and related accruing interest is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.

 

Derivative Financial Instruments

 

We apply the provisions of FASB ASC 815-10, Derivatives and Hedging (“ASC 815-10”). Derivatives within the scope of ASC 815-10 must be recorded on the balance sheet at fair value. During the year ended September 30, 2014, the Company issued convertible debt and recorded derivative liabilities related to a reset provision associated with the embedded conversion feature of the convertible debt. The Company computed the fair value of these derivative liabilities on the grant date and various measurement dates using the Black-Scholes pricing model. Due to the reset provisions within the embedded conversion feature, the Company determined that the Black-Scholes pricing model was the most appropriate for valuing these instruments.

 

  - 9 -  
 

 

In applying the Black-Scholes valuation model, the Company used the following assumptions during the period ended March 31, 2019:

 

    For the period
ended
 
    March 31, 2019  
Annual dividend yield     -  
Expected life (years)     0.50 – 1.00  
Risk-free interest rate     1.7 %
Expected volatility     22 %

 

The inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy level is based upon the lowest level of input that is significant to the fair value measurement.

 

The Company determines the fair value of its derivative instruments using a three-level hierarchy for fair value measurements which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy:

 

Level 1 — Valuation based on unadjusted quoted market prices in active markets for identical securities. Currently, the Company does not have any items as Level 1.

 

Level 2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Currently, the Company does not have any items classified as Level 2.

 

Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. The Company used the Black-Scholes option pricing models to determine the fair value of the instruments.

 

The following table presents the Company’s embedded conversion features of its convertible debt measured at fair value on a recurring basis as of March 31, 2019, and as of September 30, 2018:

 

    Carry Value at  
    March 31,     September 30,  
    2019     2018  
Derivative liabilities:                
Embedded conversion features - notes   $ 703,439     $ 726,871  
Total derivative liability   $ 703,439     $ 726,871  

 

    March 31,     September 30,  
    2019     2018  
Change in fair value included in other income (expense), net     23,432       606,150  

 

  - 10 -  
 

 

The following table provides a reconciliation of the beginning and ending balances for the Company’s derivative liabilities measured at fair value using Level 3 inputs:

 

    For the period ended     For the year ended  
    March 31,     September 30,  
    2019     2018  
Embedded Conversion                
Features - Notes:                
Balance at beginning of year   $ 726,871     $ 1,333,021  
Change in derivative liabilities     -46,864       -1,212,300  
Net change in fair value included in net loss     23,432       606,150  
Ending balance   $ 703,439     $ 726,871  

 

The Company re-measures the fair values of all its derivative liabilities as of each period end and records the net aggregate gain/loss due to the change in the fair value of the derivative liabilities as a component of other expense, net in the accompanying consolidated statement of operations. During the years ended September 30, 2018 and the 6 months ended March 31, 2019, the Company recorded a net increase (decrease) to the fair value of derivative liabilities balance of $ 606,150 and $23,432, respectively.

 

Loss per Share

 

The Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive.

 

Income Taxes

 

Income taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

Mineral Property, Mineral Rights (Claims) Payments and Exploration Costs

 

Pursuant to EITF 04-02, “Whether Mineral Rights are Tangible or Intangible Assets and Related Issues”, the Company has an accounting policy to capitalize the direct costs to acquire or lease mineral properties and mineral rights as tangible assets. The direct costs include the costs of signature (lease) bonuses, options to purchase or lease properties, and brokers’ and legal fees. If the acquired mineral rights relate to unproven properties, the Company does not amortize the capitalized mineral costs, but evaluates the capitalized mineral costs periodically for impairment. The Company expenses all costs related to the exploration of mineral claims in which it had secured exploration rights prior to establishment of proven and probable reserves.

 

Accounting Treatment of Mining Interests

 

At this time, the Company does not directly own or directly lease mining properties. However, the Company does have contractual rights and governmental permits which allow the Company to conduct mining exploration on the properties referenced in this report. These contractual relationships, coupled with the government permits issued to the Company (or a subsidiary), are substantially similar in nature to a mining lease. Therefore, we have treated these contracts as lease agreements from an accounting prospective.

 

Research and Development

 

Research and development costs are recognized as an expense in the period in which they are incurred. The Company incurred no research and development costs for the quarter ended March 31, 2019.

 

  - 11 -  
 

 

Recent Accounting Pronouncements

 

In October 2018, FASB issued Accounting Standards Update 2018-16, Derivaties and Hedging (Topic 805): Inclusion of the Secured Overnight Financing Rate (SOFR) Overight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU amends ASC 815 to add the OIS rate based on the SOFR as a fifth US benchmark interest rate. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements.

 

In October 2018, FASB issued Accounting Standards Update 2018-17: Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. This standard expands the application of a specific private company accounting alternative related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements.

 

In November 2018, FASB issued Accounting Standards Update 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The ASU amends ASC 808 to clarify ASC 606 should apply in entirety to certain transactions between collaborative arrangement participants. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements.

 

In November 2018, FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The ASU changes the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Thus, the effective date for such entities’ annual financial statements is now aligned with that for these interim financial statements. We are currently evaluating the impact that the standard will have on our consolidated financial statements and related disclosures.

 

In December 2018, FASB issued Accounting Standards Update 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors. The amendments are designed to make lessors adoption of the new leases standard easier such as accounting policy election on sales tax, exclude variable payments for all lessor costs, and clarification on lessor costs. We are currently evaluating the impact that the standard will have on our consolidated financial statements and related disclosures.

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

 

NOTE 3 – INVESTMENTS IN SUBSIDIARIES

 

The Company owns interests in the following entities which was recorded at their book value since they were related party common control acquisitions.

 

    Investment     Ownership %  
             
Aqua Mining (PNG)     34       90 %

 

As Aqua Mining (PNG) Ltd was acquired from a related entity, Five Arrows Limited (see Note 10 – Business Combinations), the shares were recorded in the accounts at their true cost value.

 

NOTE 4 – PROPERTY AND EQUIPMENT

 

    March 31,     September 30,  
    2019     2018  
             
Plant Equipment     65,869       65,869  
Motor Vehicle     111,585       111,585  
      177,454       177,454  
Less accumulated depreciation     -71,503       -64,842  
    $ 105,951     $ 112,612  

 

  - 12 -  
 

 

Depreciation expense was approximately $16,618 for the year ended September 30, 2018 and $6,678 for the 6 months ended March 31, 2019.

 

NOTE 5 – CONVERTIBLE NOTES PAYABLE

 

    March 31, 2019  
    Note face amount     Debt Discount     Net Amount of Note  
2011 Note   $ 22,166     $           -     $ 22,166  
2012 Note     48,000       -       48,000  
2013 Note     12,000       -       12,000  
2014 Note     9,000       -       9,000  
2016 Note     -       -       -  
2017 Note     -       -       -  
Total   $ 91,166     $ -     $ 91,166  

 

    September 30, 2018  
    Note face amount     Debt Discount     Net Amount of Note  
2011 Note   $ 22,166     $          -     $ 22,166  
2012 Note     48,000       -       48,000  
2013 Note     12,000       -       12,000  
2014 Note     9,000       -       9,000  
2016 Note     -       -       -  
2017 Note     -       -       -  
Total   $ 91,166     $ -     $ 91,166  

 

2011 Note

 

On May 1, 2011, the Company issued a 2.00% Convertible Note due April 30, 2012 with a principal amount of $32,000 (the “2011 Note”) for cash. Interest on the 2011 Note is accrued annually effective from May 1, 2011 forward. The 2011 Note is unsecured and repayable on demand. The 2011 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $22,166.

 

2012 Note

 

On January 2, 2012, the Company issued a 2.00% Convertible Note due January 1, 2013 with a principal amount of $48,000 (the “2012 Note”) for cash. Interest on the 2012 Note is accrued annually effective from January 2, 2012 forward. The 2012 Note is unsecured and repayable on demand. The 2012 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $48,000.

 

  - 13 -  
 

 

2013 Note

 

On January 3, 2013, the Company issued a 2.00% Convertible Note due January 2, 2014 with a principal amount of $12,000 (the “2013 Note”) for cash. Interest on the 2013 Note is accrued annually effective from January 3, 2013 forward. The 2013 Note is unsecured and repayable on demand. The 2013 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $12,000.

 

2014 Note

 

On August 25, 2014, the Company issued two 12.00% Convertible Promissory Note due February 25, 2015 with a principal amount of $50,000 each (the “2014 Note”) for cash. Interest on the 2014 Note is accrued annually effective from August 25, 2014 forward. The 2014 Note is unsecured.

 

The notes are convertible at a conversion price the lesser of (a) $0.25 per share, or (b) the price per share as reported on the Over-the-Counter Bulletin Board on the conversion date. The Note Holders also received Warrants to purchase an aggregate of 800,000 shares of our common stock at an initial exercise price of $0.25 per share. Each of the Warrants has a term of five (5) years.

 

The embedded conversion feature of the 2014 Notes and Warrants were recorded as derivative liabilities in accordance with relevant accounting guidance due to the variable conversion price of the 2014 Notes. The fair value on the grant date of the embedded conversion feature of the convertible debt was $145,362 as computed using the Black-Scholes option pricing model.

 

The Company established a debt discount of $100,000, representing the value of the embedded conversion feature inherent in the convertible debt and warrant, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using the straight-line method over the terms of the debt, which approximates the effective-interest method. For the year ended September 30, 2014, the Company recorded amortization of the debt discount of $19,566. The balance of the debt discount was $80,434 at September 30, 2014. For the quarter ended March 31, 2019, the Company recorded amortization of the debt discount of $0. The balance of the debt discount was $0 at March 31, 2019. The face amount of the outstanding note as of March 31, 2019, is $9,000.

 

2016 Notes

 

On January 5, 2016, the Company issued a $47,615 Convertible Promissory Note to the McGee Law Firm for services rendered. The Note was due on October 31, 2016 and carried interest at 12.0% per annum. On or after May 1, 2016, at the option of the holder, the then outstanding amount of the Note was convertible into common stock of the Company at a conversion price equal to the lesser of $0.01 per share or 50% of the three lowest closing prices average for the 10 business days prior to the conversion date.

 

On August 11, 2016, the Company restructured a portion a Convertible Promissory Note issued on January 5, 2016 in conjunction with an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due August 11, 2017 with a principal amount of $30,000. Interest on the 2016 Note is accrued annually effective from September 1, 2016 forward. This Note was unsecured and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001. The face amount of the outstanding note as of March 31, 2019, is $0.

 

On September 13, 2016, the Company restructured a portion a Convertible Promissory Note issued on January 5, 2016 in conjunction with an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due September 13, 2017 with a principal amount of $15,836.32. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0.

 

  - 14 -  
 

 

On August 23, 2016, the Company issued a 9.00% Convertible Promissory Note due August 23, 2017 with a principal amount of $25,000 for cash. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0.

 

On September 17, 2016, the Company issued a 9.00% Convertible Promissory Note due September 17, 2017 with a principal amount of $25,000 for cash. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0. As of March 31, 2019, the note has been discounted by $0.

 

2017 Notes

 

On October 28, 2016, the Company restructured a portion a Convertible Promissory Note issued on August 25, 2014 in conjunction with an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due October 28, 2017 with a principal amount of $35,000. Interest on the 2016 Note is accrued annually effective from November 1, 2016 forward. The 2017 Note is unsecured and repayable on demand. The 2017 Note is senior in right to all existing and future indebtedness which is subordinated by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock at a price of $0.001.

 

As this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0. As of March 31, 2019, the note has been discounted by $0.

 

NOTE 6 – LOAN FROM RELATED PARTY

 

Convertible Notes Issued to the President and Director of Kibush Capital Corporation:

 

    March 31, 2019     Debt     Net Amount  
      Note face amount       Discount       of note  
                         
Loan from related party   $ 1,857,029     $ 0     $ 1,857,029  
                         
Total   $ 1,857,029     $ 0     $ 1,857,029  

 

    September 30, 2018     Debt     Net Amount  
    Note face amount     Discount    

of note

 
                         
Loan from related party   $ 1,737,566     $          0     $ 1,737,566  
                         
Total   $ 1,737,566     $ 0     $ 1,737,566  

 

  - 15 -  
 

 

On March 31, 2014, the Company issued a 12.50% Convertible Promissory Note due March 31, 2015 with a principal amount of $157,500 (the “March 2014 Note”) for cash. Interest on the March 2014 Note is accrued annually effective from March 31, 2014 forward. The March 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion date.

 

On June 30, 2014, the Company issued a 12.50% Convertible Promissory Note due June 30, 2015 with a principal amount of $110,741 (the “June 2014 Note”) for cash. Interest on the June 2014 Note is accrued annually effective from June 30, 2014 forward. The June 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion date.

 

On September 30, 2014, the Company issued a 12.50% Convertible Promissory Note due September 30, 2015 with a principal amount of $98,575 (the “September 2014 Note”) for cash. Interest on the September 2014 Note is accrued annually effective from September 30, 2014 forward. The September 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion date.

 

On October 1, 2016, the Company issued an 8% Promissory Note due September 30, 2017 with a principal amount of $155,300 (the “October 2016 Note”) for cash received between the period September 30, 2014 and April 28,2015. No interest was to accrue on the first two years of the loan, interest on the October 2016 Note is to be accrued annually effective from October 1, 2016 forward. The October 2016 Note is unsecured. Cavenagh Capital Corporation is a shareholder in Kibush Capital Corporation.

 

NOTE 7 – STOCKHOLDER’S DEFICIT

 

Common Stock

 

On August 22, 2013, the Company’s Board authorized a 225:1 reverse stock split. All share and per share data in the accompanying financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.

 

On October 12, 2013, the Company issued by director’s resolution, 10,000,000 shares of newly issued common stock for the purchase of a Memorandum of Understanding (dated September 2, 2013) from a related company (Five Arrows Limited); which gave Kibush Capital Corporation the right to acquire 80% ownership in Instacash Pty Ltd, an Australian Currency Services provider, and corporate trustee of the Instacash Trust. As this transaction was with a related party, the value was recorded at the par value of the stock i.e. $0.001 per share of common stock.

 

Between October 23, 2013 and September 30, 2014, the Company issued a total of 3,274,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $3,274 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

On February 28, 2014, the Company issued by director’s resolution, 40,000,000 shares of newly issued common stock to conclude a Assignment and Bill of Sale (dated February 14, 2014) from a related company (Five Arrows Limited); which gave Kibush Capital Corporation the right to enter into a Joint Venture contract with the leaseholders of certain Mining Leases in Papua New Guinea. As this transaction was with a related party, the value was recorded at par value of the stock i.e. $0.001 per share of common stock.

 

Between November 1, 2014 and March 31, 2015, the Company issued a total of 4,560,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $3,274 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

Between April 1, 2016 and September 30, 2016, the Company issued a total of 190,114,175 shares of common stock upon the requests from convertible note holders to convert principal totaling $190,114 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

Between October 1, 2016 and December 31, 2016, the Company issued a total of 208,879,614 shares of common stock upon the requests from convertible note holders to convert principal totaling $208,880 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

Between January 1, 2017 and March 31, 2017, the Company issued a total of 9,375,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $9,375 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

  - 16 -  
 

 

Between April 1, 2017 and June 30, 2017, the Company issued a total of 405,000,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $405,000 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

On August 23, 2017, the Company’s Board authorized a 1:25 reverse stock split. All share and per share data in the accompanying financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.

 

Between October 1, 2017 and December 31, 2017, the Company issued a total of 180,395,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $180,395 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

Between January 1, 2018 and March 31, 2018, the Company issued a total of 139,000,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $139,000 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

Between April 1, 2018 and June 30, 2018, the Company issued a total of 120,000,000 shares of common stock upon the requests from convertible note holders to convert principal totaling $120,000 into the Company’s common stock based on the terms set forth in the loans. The conversion rate was $0.001.

 

Preferred Stock

 

Preferred stock includes 50,000,000 shares authorized at $0.001 par value, of which 50,000,000 have been designated Series A and 50,000,000 designated as Series B. A total of 3,000,000 shares of Series A preferred stock are issued and outstanding as of December 31, 2018, and September 30, 2018. A total of 20,000,000 shares of Series B preferred stock were outstanding as of December 31, 2018.

 

NOTE 8 – INCOME TAXES

 

The provision/(benefit) for income taxes for the 6 months ended March 31, 2019 and the year ended September 30, 2018 was as follows (assuming a 15% effective tax rate).

 

     

6 months ended

March 31,

      September 30,  
      2019       2018  
Current Tax Provision                
Federal-                
Taxable Income           -       -  
Total current tax provisions     -       -  
    $ -     $ -  
                 
Deferred Tax Provision                     
Federal-                      
Loss carry forwards   $ -     $ 6,838  
Change in valuation allowance   $ -   $ - 6,838
Total deferred tax provisions   $ -     $ -  

 

As of September 30, 2018, the Company had approximately $13,199,727 in tax loss carry forwards that can be utilized future periods to reduce taxable income, and the carry forward incurred for the year ended September 30, 2018 will expire by the year 2035.

 

As of March 31, 2019, the Company had approximately $13,445,097 in tax loss carry forwards that can be utilized future periods to reduce taxable income, and the carry forward incurred for the year ended September 30, 2019 will expire by the year 2036.

 

  - 17 -  
 

 

The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.

 

The federal income tax returns of the Corporation are subject to examination by the IRS, generally for three years after they are filed.

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

Details of transactions between the Corporation and related parties are disclosed below.

 

The following transactions were carried out with related parties:

 

    March 31, 2019     September 30, 2018  
             
Loan from related party   $ 1,857,029     $ 1,737,566  
Convertible Loans (B)   $ 91,166     $ 91,166  
Total   $ 1,948,195     $ 1,828,732  

 

(a) From time to time, the president and stockholder of the Company provides advances to the Company for its working capital purposes. These advances bear no interest and are due on demand.

 

(b) See Note 6 for details of Convertible notes.

 

NOTE 10 – BUSINESS COMBINATIONS

 

Set out below are the controlled and non-controlled members of the group as of March 31, 2019, which, in the opinion of the directors, are material to the group. The subsidiaries as listed below have share capital consisting solely of ordinary shares, which are held directly by the Company; the country of incorporation is also their principal place of business.

 

Name of Entity   Country of
Incorporation
 

Acquisition

Date

  Voting Equity
Interests
 
                 
Aqua Mining (PNG) Ltd   Papua New Guinea   28-Feb-2014     90 %

 

NOTE 11 – LEGAL PROCEEDINGS

 

We are not presently a party to any litigation.

 

NOTE 12 - CONTINGENT LIABILITIES

 

None.

 

NOTE 13 – SUBSEQUENT EVENTS

 

None.

 

NOTE 14 – INVENTORY

 

Inventories are valued at cost. Cost is determined using the first-in, first-out method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. There are three types of inventory in three stages of completion. Raw materials comprise of logs that are on the ground and at the log pond; Work-in-progress comprise of rough sawn timber at the Rigo site whilst Finished goods are planed, straightened timber at Laloki for sale. Each would have a different wholesale value depending on the level of processing.

 

Management is unable to verify the stocktake and valuation at year end. Accordingly, for the year ended September 30, 2018, and for the 6 months ended March 31, 2019 we written down the amounts to zero to accommodate that situation.

 

  - 18 -  
 

 

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

 

Cautionary Notice Regarding Forward Looking Statements

 

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

 

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

 

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on Form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Overview

 

Kibush Capital Corp. (the “Company”, “We”, or “Us”) is an exploration stage company as defined by the Security and Exchange Commission’s (“SEC”) Industry Guide 7 as the Company has no established reserves as required under the Industry Guide 7. The Company is undertaking mineral exploration activities in Australia and Papua New Guinea. Our business is currently comprised our subsidiary Aqua Mining. Our Aqua Mining subsidiary is active in timber processing and mineral exploration in Papua New Guinea.

 

Results of Operations

 

Six Months Ended March 31, 2019 Compared to Six Months Ended March 31, 2018

 

During the six months ended March 31, 2019, we recognized $85,178 in revenue. We recognized $48,063 revenue during the six months ended March 31, 2018. The increase in revenue is attributable to the success of our timber operations and mineral exploration activities.

 

We had a net loss for the six months ended March 31, 2019, of $245,371 and a net profit of $108,943 for the six months ended March 31, 2018. The loss for the period ended March 31, 2019 was more than the profit which occurred during the same period in 2018. Our general and administrative expenses did decrease by $10,326 for the period ended March 31, 2019, as compared to the period ended March 31, 2018.

 

  - 19 -  
 

 

Liquidity and Capital Resources

 

As of March 31, 2019, the Company had only $2,201 cash or cash equivalents on hand. However, as of that date, we had total current assets of $19,454 and total current liabilities of $3,429,855 resulting in a working capital deficit of $3,410,401. As of March 31, 2018, the Company had total current assets of $11,074 and total current liabilities of $3,598,439 resulting in a working capital deficit of $3,587,365. The decrease in working capital deficit arose mainly due to decrease in loans owing to related parties, who provided advances to the Company for working capital purposes. The Company intends to fund its exploration through the revenues from the logging activities and the sale of its equity securities. However, there can be no assurance that the Company will be successful doing so. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

Factors Affecting Future Mineral Exploration Results

 

We have generated no revenues from mining exploration, since inception. As a result, we have only a limited history upon which to evaluate our future potential performance. Our potential must be considered by evaluation of all risks and difficulties encountered by exploration companies which have not yet established business operations and anticipated results and situations of entering active exploration activities.

 

Off-Balance Sheet Arrangements

 

We had no Off-Balance Sheet arrangements during the quarter ended March 31, 2019.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that the lack of a functioning audit committee, the lack of segregation of duties within accounting functions, and the lack of multiple directors on our board of directors may result in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements and/or reporting.

 

Changes in Internal Control Over Financial Reporting

 

There was no change in our internal control over financial reporting during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

We are not presently a party to any litigation.

 

ITEM 1A. RISK FACTORS.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES.

 

None.

 

  - 20 -  
 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

None.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

The following documents are included herein:

 

Exhibit       Incorporated by reference   Filed
Number   Document Description   Form   Date   Number   herewith
3.1   Articles of Incorporation   10/A   08/05/15   3.1    
                     
3.2   Certificate of Amendment dated 2/4/2005   10/A   08/05/15   3.2    
                     
3.3   Articles of Merger   10/A   08/05/15   3.3    
                     
3.4   Certificate of Amendment dated 8/22/2013   10/A   08/05/15   3.4    
                     
3.5   Amended and Restated Articles dated 7/7/2010   10/A   08/05/15   3.5    
                     
3.6   Certificate of Amendment dated 8/22/2013   10/A   08/05/15   3.6    
                     
3.7   By-laws   10/A   08/05/15   3.7    
                     
4.1   Certificate of Designation dated 4/19/2011   10/A   08/05/15   4.1    
                     
21   List of Subsidiaries   10/A   08/05/15   21    
                     
31.1   Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002               X
                     
32.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer               X
                     
101.INS   XBRL Instance Document               X
                     
101.DEF   XBRL Taxonomy Extension – Definitions               X
                     
101.LAB   XBRL Taxonomy Extension – Labels               X
                     
101.PRE   XBRL Taxonomy Extension – Presentation               X

 

  - 21 -  
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 13th day of May, 2019.

 

  KIBUSH CAPITAL CORP.
     
  BY: /s/ WARREN SHEPPARD
    Warren Sheppard
    President, Chief Executive Officer, Chief Financial and Director

 

  - 22 -  
 

 

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