NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – GENERAL
|
A.
|
Darkstar Ventures, Inc. (“the Company”(was
incorporated on May 8, 2007 under the laws of the State of Nevada.
|
The Company established a wholly-owned
subsidiary in Israel, Bengio Urban Renewals Ltd (“Bengio”), to focus its limited resources in the area of real estate
development, particularly focusing on the urban renewal market in Israel.
The Company’s activities
are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s
current business plan.
The Company has not commenced
planned principal operations. The Company had an accumulated deficit of $2,458,365 as of July 31, 2019. In addition, the Company
continues to have negative cash flows from operations. These factors raise substantial doubt about the Company’s ability
to continue as a going concern.
There can be no assurance that
sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from
the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially
curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no
assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant
dilutive effect on the Company’s existing stockholders.
The accompanying financial statements
do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification
of liabilities that may result should the Company be unable to continue as a going concern.
|
C.
|
Binding Merger Agreement
|
On May 10, 2019, the Company
entered into a binding merger agreement with Samsara Luggage, Inc. (“Samsara”), a smart luggage company, pursuant to
which Samsara will merge with and into the Company, and the current shareholders of Samsara will be issued new shares of the Company
representing approximately 80% of the issued and outstanding shares of the Company’s common stock following the completion
of the merger.
The closing of the merger transaction
is subject, among other standard closing conditions, to the following conditions:
|
(1)
|
The completion of all missing information, exhibits, and
schedules to the merger agreement to the satisfaction of Samsara.
|
|
(2)
|
An increase in the authorized share capital of the Company.
|
|
(3)
|
The spin-off and sale of the Company’s wholly owned Israeli subsidiary, Bengio Urban Renewals
Ltd., to Avraham Bengio, the current CEO of the Company.
|
|
(4)
|
The Company having raised at least $500,000 in financing.
|
|
(5)
|
A Registration Statement on Form S-4 for the Company shares to be issued to the shareholders of
Samsara having been declared effective by the Securities and Exchange Commission.
|
|
(6)
|
All required consents and approvals for the merger transaction having been obtained.
|
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES
The functional currency of the
Company is the U.S. dollar (“$” or “dollar”), which is the currency of the primary economic environment
in which the operations of the Company are conducted. The functional currency of its foreign subsidiary is the New Israeli Shekel
(“NIS”).
The financial statements of
the subsidiary were translated into dollars in accordance with the relevant standards of the Financial Accounting Standards Board
(“FASB”). Accordingly, assets and liabilities were translated from NIS to $ using year-end exchange rates and income
and expense items were translated at average exchange rates during the year.
Gains or losses resulting from
translation adjustments are reflected in stockholders’ deficit, under “accumulated other comprehensive income (loss)”.
Balances denominated in, or
linked to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date.
|
|
As of July 31,
|
|
|
As of July 31,
|
|
|
|
2019
|
|
|
2018
|
|
Official exchange rate of NIS 1 to U.S. dollar
|
|
|
0.286
|
|
|
|
0.273
|
|
|
b.
|
Principles of consolidation
|
The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. Inter-company balances and transactions have been eliminated
upon consolidation.
Cash equivalents are short-term
highly liquid investments which include short term bank deposit (up to three months from date of deposit), that are not restricted
as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.
The company’s cash and cash
equivalents are maintained with major banking institutions in Israel.
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States requires management to make assumptions
and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses
and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other
factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis,
management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented
fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty,
actual results could differ from our assumptions and estimates, and such differences could be material. As applicable to the consolidated
financial statements included elsewhere in this report, the most significant estimates and assumptions relate to (i) the going
concern assumptions, (ii) measurement of Convertible Note.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (cont.)
Share-based payments to employees
are measured at the fair value of the options issued and amortized over the vesting periods. Share-based payments to non-employees
are measured at the fair value of the goods or services received or the fair value of the equity instruments issued if it is determined
the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received.
The amount recognized as an expense is adjusted to reflect the number of awards expected to vest. The offset to the recorded cost
is to share-based payments reserve. Consideration received on the exercise of stock options is recorded as capital stock and the
related share-based payments reserve is transferred to share capital.
Net loss per share, basic and diluted,
is computed on the basis of the net loss for the period divided by the weighted average number of common shares outstanding during
the period. Diluted net loss per share is based upon the weighted average number of common shares and of common shares equivalents
outstanding when dilutive. Common share equivalents include: (i) outstanding stock options under the Company’s share incentive
plan and warrants which are included under the treasury share method when dilutive, and (ii) common shares to be issued under the
assumed conversion of the Company’s outstanding convertible notes, which are included under the if-converted method when
dilutive. The computation of diluted net loss per share for the years ended July 31, 2016, and 2015, does not include common share
equivalents, since such inclusion would be anti-dilutive.
Deferred taxes are determined utilizing
the asset and liability method based on the estimated future tax effects of differences between the financial accounting and tax
bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the tax rates expected
to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, based upon
the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company has provided a full valuation allowance with respect to its deferred tax assets.
|
h.
|
Property, plant and equipment
|
Property, plant and equipment are
stated at cost, less accumulated depreciation. Assets are depreciated using the straight-line method over their estimated useful
lives. Computers, software and electronic equipment are depreciated over three years. Tools and equipment are depreciated over
ten years.
|
i.
|
Land development costs
|
Land development costs,
including estimated value of land, under TAMA 38 purchase agreements are capitalized when definite agreement is signed with the
tenants. Tax arising from such agreements is recorded as Obligation under construction agreements when the Company can estimate
the tax obligation.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
j.
|
Fair value measurements
|
The Company applies fair value
accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at
fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received
from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value,
the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements
or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques,
transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs
used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that
is available and significant to the fair value measurement:
Level 1 – Quoted prices in
active markets for identical assets or liabilities.
Level 2 – Observable inputs
other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets
or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the assets or liabilities.
Level 3 – Inputs that are
generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing
the asset or liability.
In accordance with the fair value
accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value.
The Company has not elected the fair value option for any eligible financial instruments.
As of July 31, 2019 and 2018, the
carrying value of accounts payable and loans that are required to be measured at fair value, approximated fair value due to the
short-term nature and maturity of these instruments
The Company has Level 3 financial
instrument, an embedded derivative liability that is recorded at fair value on periodic basis. The embedded derivative is evaluated
under the hierarchy of ASC 480-10, ASC 815-15 and ASC 815-10-15 addressing embedded derivatives. The fair value of such Level 3
financial instrument is estimated using the Black-Scholes option pricing model and Monte Carlo Simulation Model. The foregoing
Level 3 financial instrument has certain provisions which qualifies to be classified as a liability under ASC 815.
As of July 31, 2019, the following
table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring
basis:
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Fair value of warrants issued in convertible loan
|
|
|
|
|
|
|
|
|
|
|
392,693
|
|
Fair Value of convertible component in convertible loan
|
|
|
|
|
|
|
|
|
|
|
327,283
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
719,976
|
|
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
k.
|
Adoption of New Accounting Standards
|
In June 2016, the FASB issued
a new standard, ASU 2016-13 – “Financial Instruments—Credit Losses”, requiring measurement and recognition
of expected credit losses on certain types of financial instruments. The standard also modifies the impairment model for available-for-sale
debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their
origination. This standard is effective for the Company after December 15, 2019. The standard does not have a material impact on
the Company’s financial statements.
In February 2016, the FASB issued
a new lease accounting standard, ASU 2016-02 - “Leases”, requiring the recognition of lease assets and liabilities on
the balance sheet. This standard is effective starting January 1, 2019. The adoption of ASU 2016-02 is not expected to have a material
impact on the Company’s financial statements.
In May 2014, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts
with Customers,” and modified the standard thereafter. The objective of the ASU is to establish a single comprehensive model
for entities to use in accounting for revenue arising from contracts with customers that will supersede most current revenue recognition
guidance. The basis of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods and services. The Company adopted this standard as of January 1, 2018 using the modified retrospective method. See Note 2.H.
to the consolidated financial statements for additional details.
On January 5, 2016, the FASB
issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requiring changes
to recognition and measurement of certain financial assets and liabilities. The standard primarily affects equity investments,
financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.
The Company adopted ASU 2016-01 in the first quarter of 2018 and the impact on its consolidated financial statements was not material.
In November 2016, the FASB issued
ASU 2016-18 “Restricted Cash” to provide guidance on the presentation of restricted cash in the statement of cash flows.
Currently, the statement of cash flows explained the change in cash and cash equivalents for the period. The ASU requires that
the statement of cash flows explain the change in cash, cash equivalents and restricted cash for the period. The ASU is effective
for the Company in the first quarter of 2018, with early adoption permitted. The Company did not have a material effect on the
statements of cash flows as the Company’s restricted cash is not material.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2
– SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
l.
|
Newly issued accounting pronouncements
|
In June 2018, the FASB issued ASU
No. 2018-07 “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.”
These amendments expand the scope of Topic 718, Compensation – Stock Compensation (which currently only includes share-based
payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting
for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity
– Equity-Based Payments to Non-Employees. The Company plans to adopt this standard in the first quarter of 2019. ASU 2018-07
is not expected to have an impact on Company’s consolidated financial statements.
In August 2018, the FASB issued
ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements,” which will improve the effectiveness
of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain
disclosure requirements and is effective for the Company beginning on January 1, 2020. The Company does not expect that this standard
will have a material effect on the Company’s consolidated financial statements.
NOTE 3
– LAND DEVELOPMENT COSTS
The Company signed two definite
agreements with tenants one under “Tama 38” Israeli national zoning plan (“Tama 38”) and another under “Pinui
Binui” project.
According to the Tama 38 signed
project the Company assumes the responsibility of renovating 32 apartments in exchange for covering all costs of renovations, securing
building permits and paying requisite taxes. The Company was granted the right to build an additional 28 apartments connected to
the existing building that would be sold upon completion of the project.
According to the “Pinui Binui”
project the residents of 12 apartments are temporarily evacuated so that the buildings may be demolished and rebuilt. Under
the agreement the Company will pay all costs for demolition, construction, relocating apartment owners and renting their temporary
homes during construction. In exchange, the Comapny intends to add 24 new apartments to the building that would be sold upon
completion of the project.
Both agreements are conditional
upon obtaining the final approval from the cities’ planning institutions and other conditions set forth in the agreements. As the
Company could not estimate the land purchase taxes arising from the agreements such costs were not accrued in this financial statements.
Land purchase taxes are not due until final approvals are obtained.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4
– CONVERTIBLE LOAN
On June 5, 2019, the Company
entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which
the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and
the Company agreed to issue convertible debentures and a warrant to the Investor.
The first tranche of the loan
in the amount of $200,000 was provided upon signature of the SPA. The second tranche in the amount of $300,000 will be provided
upon the Company filing of a Registration Statement on Form S-4 in connection with the Merger with Samsara. The third tranche in
the amount of $600,000 will be provided upon consummation of the Merger with Samsara and the fulfillment of all conditions required
for the Merger. The funds are expected to be used to finance Company’s activities through its merger with Samsara and to
finance Samsara’s working capital needs until the Merger.
Each tranche of the loan will
bear interest at an annual rate of ten percent (10%). The principal amount together with the accrued and unpaid interest will be
repayable after two years. Each tranche of the loan together with the accrued and unpaid interest (or any portion at the discretion
of the Investor) will be convertible at any time six months following the issuance date, into shares of Company’s common
stock at a conversion price equal to the lower of $0.003 per share or 80% of the lowest volume-weighted average price (VWAP) of
Company’s share during the period of 10 days preceding the conversion date.
In accordance with ASC 815-15-25
the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value
can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded
finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component
fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting
gains or losses shown in the statements of operations.
The fair value of the convertible
component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative
and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions
used as of the balance sheet date:
|
|
July 31,
2019
|
|
Expected volatility (%)
|
|
|
32.21
|
%
|
Risk-free interest rate (%)
|
|
|
1.91
|
%
|
Contractual term (years)
|
|
|
1.85
|
|
Conversion prince
|
|
|
(*
|
)
|
Underlying Share price (US dollars)
|
|
|
0.0069
|
|
Convertible debenture amount
|
|
|
240,000
|
|
|
(*)
|
As detailed above the conversion price is the lower of
$0.003 or 80% of the VWAP during the period of 10 days preceding the conversion date.
|
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – CONVERTIBLE LOAN (cont.)
In addition, the Company issued
to the Investor a warrants to purchase 91,666,666 shares of common stock, at an exercise price equal to $0.003. The warrants may
be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares
having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the
provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable
Warrants that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable
exercise price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the
Company subsequently issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed
to the Company’s own stock. Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition.
In subsequent periods (and throughout July 31, 2019), the Warrants were marked to market with the changes in fair value recognized
as financing expense or income in the consolidated statement of operations.
The warrants were estimated
by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to
market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of
the balance sheet date:
|
|
July 31,
2019
|
|
Dividend yield
|
|
|
0
|
|
Expected volatility (%) (*)
|
|
|
31.75
|
%
|
Risk-free interest rate (%)
|
|
|
1.84
|
%
|
Contractual term (years)
|
|
|
4.85
|
|
Exercise price (US dollars)
|
|
|
0.03
|
|
Share price (US dollars)
|
|
|
0.0069
|
|
Fair value (US dollars)
|
|
|
0.0043
|
|
|
(*)
|
Since the Company is expected to merge, the expected volatility
was based on the historical volatility of the share price of the average of three public companies that operate in the same industry
sector as the Company
|
The following table presents
the changes in fair value of the level 3 liabilities for the year ended July 31, 2019:
|
|
Warrants
|
|
|
Convertible component
|
|
Outstanding at July 31,2018
|
|
|
-
|
|
|
|
-
|
|
Fair value of issued level 3 liability
|
|
|
553,450
|
|
|
|
465,970
|
|
Changes in fair value
|
|
|
(160,757
|
)
|
|
|
(138,687
|
)
|
Outstanding at December 31,2018
|
|
|
392,693
|
|
|
|
327,283
|
|
As of July 31, 2019 the Company
received the first tranche of the loan in the amount of $200,000.
On October 24, 2019 the Company
received the second tranche of the loan in the amount of $300,000.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5
– LONG TERM LOAN
On February 28, 2016, Bengio
and TCSM INC signed a loan agreement according to which TCSM would grant the Company a loan of up to $256,016 (NIS 1,000,000).
The loan bears interest at an annual rate of 25%. The principal and interest will be repaid at March 1, 2019.
On February 28, 2016 TCSM INC assigned
its rights in the above loan agreement to a third party. The loan is secured by Avraham Bengio, the Company’s majority holder of
the issued and outstanding shares of common stock and its Sole Director, CEO and CFO in an amount of up to $185,767 (NIS 650,000).
On March 8, 2017 Bengio entered
into a loan agreement with a third party (the “Lender”) according to which the lender will lend the company up to $214,347
(NIS750,000). The loan bears annual nominal interest of 25%. The loan and accrued interest matures on March 15, 2020. In addition,
the Company undertook to issue the Lender 1% of the outstanding common shares of the Company (6,473,450 common shares) and to finance
the cost of its par value ($6,473). As of the balance sheet date such shares have not been issued yet. The value of the obligation
to issues shares was valued at $64,735 and was recorded as additional paid in capital and was offset against the loan balance.
As of July 31, 2019, the balance
of the loans and accumulated interest net of the unamortized portion of the share obligation, amounts to $923,972.
NOTE 6
– SHARHOLDER’S EQUITY
The Company’s Board of
Directors may issue authorized but unissued shares of preferred stock in series and at the time of issuance, determine the rights,
preferences and limitation of each series. The holders of preferred stock may be entitled to receive a preference payment in the
event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of the common stock.
Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting
power of the holders of the common stock.
On February 16, 2016, the Board
of Directors of the Company and the holder of a majority of the issued and outstanding shares of common stock of the Company (the
“Majority Consenting Stockholder”), together, executed a joint written consent to authorize and approve a Certificate
of Amendment to the Company’s Articles of Incorporation to increase the authorized capital stock of the Company from 505,000,000
shares (the “Capital Stock”), consisting of 500,000,000 shares of common stock, par value $0.0001 (the “Common Stock”)
and 5,000,000 shares of preferred stock, par value $0.0001 (the “Preferred Stock”), to an authorized capital stock of
the Corporation of 2,005,000,000 shares consisting of 2,000,000,000 shares of Common Stock and five million 5,000,000 shares of
Preferred Stock. It was also decided that the Board of Directors shall have the authority to establish one or more series of Preferred
Stock and fix relative rights and preferences of any series of Preferred Stock, without any further action or approval of our stockholders.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6
– SHARHOLDER’S EQUITY (cont.)
|
C.
|
On September 26, 2019, the Company entered into share purchase
agreements with five non-U.S. investors pursuant to which the investors undertook to invest an aggregate amount of $500,000 in
the Company, and the Company undertook to issue to the investors shares of common stock at a price per share equal to $0.0024.
In addition, the Company undertook to issue to one of the investors additional shares of common stock valued at $50,000, at $0.0024
price per share, as a finder’s fee for the transaction. While the closing of this investment transaction has yet to occur
due to technical reasons, the investors advanced the aggregate purchase price to the Company in May 2019. The amount received
is presented in the balance sheet under proceeds on account of shares not yet issued. The aggregate number of shares of common
stock to be issued to the investors upon closing is 229,166,666. As part of this transaction, the Company also granted the investors
warrants to purchase an aggregate amount of 104,166,666 shares of common stock of the Company at an exercise price equal to US$0.0048
per share. The warrants are exercisable during a period of one year from the date of grant. The funds are expected to be used
to finance Company’s activities through its merger with Samsara and to finance Samsara’s working capital needs until
the Merger.
|
NOTE 7 – INCOME TAXES
At July 31, 2019 the Company
had available net-operating loss carryforwards for Federal tax purposes of approximately $550,000, which may be applied against
future taxable income, if any, through 2039. Certain significant changes in ownership of the Company may restrict the future utilization
of these tax loss carryforwards.
At July 31, 2019 the Company
had a deferred tax asset of approximately $138,000 representing the benefit of its net operating loss carryforwards. The Company
has not recognized the tax benefit because realization of the tax benefit is uncertain and thus a valuation allowance has been
fully provided against the deferred tax asset. The difference between the Federal Statutory Rate of 25% and the Company’s
effective tax rate of 0% is due to an decrease in the valuation allowance of approximately $3,000 for the year ended July 31, 2019
and increase of $7,000 for the years ended July 31, 2018.
The Company’s subsidiary
has estimated total available carryforward operating tax losses for Israeli income tax purposes of approximately $788,000 as of
July 31, 2019, which may be carryforward to offset against future income for an indefinite period of time.
The Company has no uncertain
tax positions that require the Company to record a liability.
The Company had no accrued penalties
and interest related to taxes as of July 31, 2019.
DARKSTAR VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – RELATED PARTIES
A.
Transactions and balances with related parties
|
|
Year ended
December 31
|
|
|
Year ended
December 31
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
General and administrative expenses:
|
|
|
|
|
|
|
Management fee (*)
|
|
|
181,030
|
|
|
|
165,000
|
|
|
|
|
181,030
|
|
|
|
165,000
|
|
|
|
|
|
|
|
|
|
|
B. Balances with related parties and
officers:
|
|
|
|
|
|
|
|
|
Current assets – Related parties
|
|
|
-
|
|
|
|
3,667
|
|
Other accounts liabilities
|
|
|
217,308
|
|
|
|
-
|
|
|
(*)
|
On November 1, 2017, Bengio and Bengio Urban Renewals Management
Ltd (“Bengio Management”), a company controlled by the Company’s majority shareholder, signed a Management Service
Agreement according to which the shareholder would provide management services to Bengio that includes among other, locating potential
projects, signing tenants and construction management. In consideration for the services above the Company shall pay a monthly
fee of $15,000 and $10,000 for each project signed and 1.5% of the projects costs (as approved by the escorting bank).
|